Corporate Business Finance

Project finance is a kind of Financing that has a priority does not depend on the creditworthiness of the sponsors proposing the business idea to launch the project. Approval does not even depend on the value of assets sponsors are willing to make available as collateral. Instead, it is basically a function of the project’s ability to repay the debt contracted and remunerate capital invested at a rate consistent with the degree of

1. The ACE Company has five plants nationwide that cost $100 million. The current market value of the plants is $500 million. The plants will be recorded and reported as assets at

Unit: ACCG252: Applied Financial Analysis and Management Date: Tuesday 14th June 2011 at 8:50am Time Allowed: 3 hours plus 10 minutes reading time. Total Number of Questions: 30 Multiple Choice Questions plus 9 full response

Project managers must take into account the unique financial aspects of their projects. Failure to understand the financial ramifications of a project, or of any method of executing a project, can lead to significant adverse outcomes not only for the project as well. Project managers must always bear in mind their role as stewards of the company and agents of the shareholders. In this agency role, project managers must ensure that the project is structured in such a way that it adds value to the company by delivering a positive return to the shareholders (Mahaney & Lederer, 2003). This paper will outline some of the most important financial considerations that project managers should be aware of, and apply this knowledge real work project management practice.

Project finance is best understood in terms of a risk allocation which reconciles the potentially conflicting objectives of borrowers and lenders by utilizing the long-term economic and commercial linkages between the sponsors, lenders and third party participants involved with a project. (Howcroft &Fadhley, 1998).

What is ‘project finance’? The term features prominently in the press, more specifically with respect to infrastructure, public and private venture capital needs. The press often refers to huge projects, such as building infrastructure projects like highways, Eurotunnel, metro systems, or air- ports. It is a technique that has been used to raise huge amounts of cap- ital and promises to continue to do so, in both developed and developing countries, for the foreseeable future.

LECTURES ON CORPORATE FINANCE - (Second Edition) © World Scientific Publishing Co. Pte. Ltd. http://www.worldscibooks.com/economics/6188.html

Project finance is a term used freely by a number of professionals including bankers, journalists, and academics in order to describe a variety of financing activities. Project finance is a decades-old term that preexists corporate finance. However, the rolling growth in infrastructure undertakings in the developing world funded by privately financed organizations is continuously attracting greater attention. When considering financing for development, there are two main issues that need to be taken into consideration. Firstly, the capability of financing must ensure adequate public spending meets anticipated social and economic ventures. Secondly, the ability of long-term financing to provide economies that require and growth and development enough capital to grow to their full potential.

While project financing could in theory be applied to all aspects of international construction, and large projects, there are however some factors that must be considered to verify if project financing is the appropriate method. The right candidates are those that can function independently from an economic point of view, can be finished without any uncertainty, and

Financial Validation, as it pertains to Project Management, is the process of evaluating projects to determine their suitability for investment measured by their quantifiable benefits and return on investment (ROI). This process typically occurs in one step of the project governance process following project idea generation, but may also be an iterative process that occurs over the project’s lifecycle. The iterative approach is usually done to monitor the results of the project during the execution phase and compare them to the project plan in order to determine if the project is meeting its desired specifications. Regardless of the method chosen, financial validation is used to ensure the financial impact and effectiveness of the proposed project.

The absorption capacity is one of key indicators on which financing agencies base the allocation of financial resources to sponsored projects, and should hence be closely monitored. Its level was reported to be low in developing countries, according to studies conducted by the World Bank, the OECD and ODI. However these studies focused on macroeconomic indicators and less on developing

- Can be allowed for in project evaluation by risk and uncertainty analysis. Plans should be made to obtain 'contingency funds ', (bank overdraft).

Phase I of the project, costing Rs. 1818 crore has been funded with a debt of Rs. 1157 crore from banks at 11.5 per cent rate of interest, which is lower than usual charge of 12 per cent. The rest of the money has come from equity (Rs. 65 crore) and internal accrual (Rs. 596 crore). Land development

A Research Project proposal submitted to Mount Kenya University in partial fulfillment of requirement for the degree of Masters in Business Administration, Accounting and Finance

any infrastructure project should be made eligible for priority sector lending while making subtargets fungible within the overall target. There is another view that enlargement of areas has resulted in loss of focus. It is also held that credit growth in housing, venture capital and infrastructure has been strong while it has been sluggish in agriculture and small industries. Further, it is argued that only sectors that impact large population, weaker sections and are employment-intensive such as agriculture, tiny and small industry should be eligible for priority sector. Since there are several issues that need to be considered in this regard, it is appropriate that these are debated and examined in depth”.