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Name Smart Task No. Project Topic
Name Smart Task No. Project Topic
Task Q1 : How a new venture is assessed to qualify as project finance. What are the factors that needed
to be considered?
Task Q1 Solution :
New venture are being assessed in terms of many factors in order to qualify as project finance. As the
lenders always want to invest in a venture which is capable of paying them off.
New ventures are assessed in following ways to quality as project finance. These are the important
factors that are needed to be considered in order to assess a new venture-
3. Project credibility-
If lenders or investors decide to put money in your project, its because they hope the the
investment will pay off. They’ll make sure your provision are based on verifiable facts are
realistic.
6. Security-
Debt financing is usually secured against company assets, which could be sufficient to allow
lenders to cover their risk.
Task Q2 Solution :
Revenue model is how a business makes money. Revenue model of solar PV project, residential
building, manufacturing unit and other PPP projects are explained as follows-
this-
1. CAPEX-
● Cost of plant is beared by client/end users.
● Maintenance of system is in client scope after AMC period under STC (Standard test
conditions).
● No over head expenses for EPC (engineering, procurement and construction).
● No capital loss risk for EPC.
2. OPEX/RESCO/PPA-
● Cost of plant is beared by third party.
● Revenue depends on PPA rate (Solar Power Purchase Agreement is a agreement where
developer arranges for the design, permitting, financing and installation of a solar energy
system on a customer’s property at little to no cost)and probably would be constant over
a period.
● Maintenance of system is in scope of third party for total duration of PPA.
Residential building is defined as building that generate revenue or have potential to do so. It is
generally focused on commercial real estate that is purchased and then rented out to individuals or
businesses, as opposed to residential real estate, such as single family homes, that is owner-occupied
and not rented out to others.
In residential estate, individuals or business, i.e tenants, pay rents to property owners to use their space.
The owner earns income from this rent, and they use part of it to pay for expenses such as
utilities, property taxes, and insurance. In some cases, tenants are responsible for portion of these
expenses as well. Here is an important definition of Residential financial modelling-
In residential building financial modelling, you analyze a property from the perspective of an
equity investor (owner) or debt investor(lender) in the property and determine whether or not
the equity or debt investor should invest, based on risks and potential returns.
In manufacturing unit, revenue is generated by selling the finished goods. The Manufacturing
Revenue Model provides a framework to accurately forecast the financial statements of a
manufacturing company over the next 10 years. The model uses a detailed breakdown to estimate the
company’s operating assumptions on a per ton basis. The model then uses financial ratio analysis and
contains a DCF valuation framework. Furthermore, the model also includes an acquisition analysis with
sources and uses of funds, as well as investor IRR analysis based on dividend and exit valuation
assumptions.
The PPP project’s revenues are obtained from the government and/or fees (tariffs) charged to
the users of the service. In some projects, the private sector provider also pays concession fees to the
government or to another designated authority, in return for the use of the government’s projects, for
example, the concession fee is based on the use of the service or the net income, giving the government
a vested interest in the success of the project. In such cases, the government’s interests are comparable
to those of an equity investor.
ould be the additional points that needed to be included in a financial model, if the financing bank is from abroad and the debt is in US$ bu
tion :
al points that needed to be included in a financial model, if the financing bank is from abroad and the debt is in UD$ but revenue is in INR
be currency exchange rate (USD/INR) been mentioned in the financial model so that the finflow sheet is consistent.
ax and transaction charges need to be paid for the financing of the project.
500 Words (Max)