6.2 Bus Project Finance_Question
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Assumptions - Bus Assumptions - Financing Assumptions - General Cost of Bus 7,500,000 Debt 75% Tax Rate 33% Maintenance / year 10% Equity 25% Escalation Rate - Maintenance 15% Interest on Debt 15% Interest Income 5% Life of Bus (years) 4 Tenure of loan (years) 4 Diesel rate (Rs./Lit) 42 Deprecation Rate 25% SLM Cost of Equity 20% Diesel Price escalation 15% Inflation 10% Assumptions - Operating Revenues Assumptions - Operating Costs Assumptions - Operating General Seating Capacity 35 Fuel Efficiency ( Km / L ) 5 Route Mumbai - Pune Load Factor 50% Driver Cost (Rs./ Trip) 500 Distance (Kms) 155 Tariff (Rs./Ticket) 300.00 Miscellaneous (Rs. / Trip) 500 Estimated Time Hours/Trip 3 Escalation Rate - Tariff 10% Toll Amount (Rs. / Trip) 500 Trips / Day 4 Income Statement 21,000.00 226300 Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 1900920 Flag 0 1 2 3 4 Revenue 7,665,000 8,431,500 9,274,650 10,202,115 Escalation Rate - Tariff Other Income - 40,954 87,958 140,876 All inflation/escalation happens from year 2 Fuel Costs 1,900,920 2,186,058 2,513,967 2,891,062 Diesel Price escalation Maintenance Expenses 750,000 862,500 991,875 1,140,656 Driver Costs 730,000 803,000 883,300 971,630 Increase at inflation rate Miscellaneous Costs 730,000 803,000 883,300 971,630 Increase at inflation rate Toll Amount 730,000 730,000 730,000 730,000 Toll amount remains constant Cost of Revenues 4,840,920 5,384,558 6,002,442 6,704,978 Gross Pofit / (EBITDA) 2,824,080 3,087,896 3,360,166 3,638,013 Depreciation 1,875,000 1,875,000 1,875,000 1,875,000 Interest Expense 843,750 674,776 480,456 256,988 Profit Before Tax 105,330 538,120 1,004,710 1,506,025 Income Taxes 34,759 177,580 331,554 496,988 1406250 Profit After Tax 70,571 360,540 673,156 1,009,037 15% 4 Balance Sheet Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 Debt Schedule Assets Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 Cash - 819,078 1,759,152 2,817,521 3,988,304 BOP - Debt 5,625,000 4,498,507 3,203,041 1,713,254 PPE, Gross 7,500,000 7,500,000 7,500,000 7,500,000 7,500,000 Int Expense 843,750 674,776 480,456 256,988 Acc Depreciation 1,875,000 3,750,000 5,625,000 7,500,000 EAI(eual anual insta) 1,970,243 1,970,243 1,970,243 1,970,243 PPE, Net 7,500,000 5,625,000 3,750,000 1,875,000 - EOP - Debt 5,625,000 4,498,507 3,203,041 1,713,254 - Total Assets 7,500,000 6,444,078 5,509,152 4,692,521 3,988,304 Principle Repaid 1,126,493 1,295,466 1,489,786 1,713,254 Liabilities Debt 5,625,000 4,498,507 3,203,041 1,713,254 - Equity 1,875,000 1,875,000 1,875,000 1,875,000 1,875,000 Retained Profit - 70,571 431,111 1,104,267 2,113,304 Total Liabilities 7,500,000 6,444,078 5,509,152 4,692,521 3,988,304 Checksum - - - - - Cash Flow Statement Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 Net Income (PAT) - 70,571 360,540 673,156 1,009,037 Depreciation - 1,875,000 1,875,000 1,875,000 1,875,000 Cash Flow From Operations - 1,945,571 2,235,540 2,548,156 2,884,037 Capex (7,500,000) - ### - ### Cash Flow from Investing (7,500,000) - ### - ### Debt (Repayment)/Issuance 5,625,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254) Equity Addition 1,875,000 Cash Flow from Financing 7,500,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254) Net change in Cash - 819,078 940,074 1,058,369 1,170,782 Cash - BOP 819,078 1,759,152 2,817,521 Cash - EOP 819,078 1,759,152 2,817,521 3,988,304 Checksum - - - - Free Cash Flow - Equity Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 Net Income - 70,571 360,540 673,156 1,009,037 + Depreciation - 1,875,000 1,875,000 1,875,000 1,875,000 Financing Debt (%) - For Neutral Case - Capital Expenses (7,500,000) Interest Rate (%) 35.95% 10% 25% 40% 55% 95% - Debt Repayment/+ raised 5,625,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254) 12% Cash Flow to Equity (1,875,000) 819,078 940,074 1,058,369 1,170,782 13% 14% 15% Returns Analysis - Equity 16% Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 17% FCFE (1,875,000) 819,078 940,074 1,058,369 1,170,782 Cost of Equity 20% NPV 637,490 IRR 35.95% year
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Transcript of 6.2 Bus Project Finance_Question
Assumptions - Bus Assumptions - Financing Assumptions - General
Cost of Bus 7,500,000 Debt 75% Tax Rate 33%Maintenance / year 10% Equity 25%Escalation Rate - Maintenance 15% Interest on Debt 15% Interest Income 5%Life of Bus (years) 4 Tenure of loan (years) 4 Diesel rate (Rs./Lit) 42Deprecation Rate 25% SLM Cost of Equity 20% Diesel Price escalation 15%
Inflation 10%Assumptions - Operating Revenues Assumptions - Operating Costs Assumptions - Operating General
Seating Capacity 35 Fuel Efficiency ( Km / L ) 5 Route Mumbai - PuneLoad Factor 50% Driver Cost (Rs./ Trip) 500 Distance (Kms) 155Tariff (Rs./Ticket) 300.00 Miscellaneous (Rs. / Trip) 500 Estimated Time Hours/Trip 3Escalation Rate - Tariff 10% Toll Amount (Rs. / Trip) 500 Trips / Day 4
Income Statement 21,000.00 226300Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 1900920
Flag 0 1 2 3 4Revenue 7,665,000 8,431,500 9,274,650 10,202,115 Escalation Rate - TariffOther Income - 40,954 87,958 140,876 All inflation/escalation happens from year 2
Fuel Costs 1,900,920 2,186,058 2,513,967 2,891,062 Diesel Price escalationMaintenance Expenses 750,000 862,500 991,875 1,140,656 Driver Costs 730,000 803,000 883,300 971,630 Increase at inflation rateMiscellaneous Costs 730,000 803,000 883,300 971,630 Increase at inflation rateToll Amount 730,000 730,000 730,000 730,000 Toll amount remains constant
Cost of Revenues 4,840,920 5,384,558 6,002,442 6,704,978
Gross Pofit / (EBITDA) 2,824,080 3,087,896 3,360,166 3,638,013
Depreciation 1,875,000 1,875,000 1,875,000 1,875,000 Interest Expense 843,750 674,776 480,456 256,988
Profit Before Tax 105,330 538,120 1,004,710 1,506,025
Income Taxes 34,759 177,580 331,554 496,988 1406250Profit After Tax 70,571 360,540 673,156 1,009,037 15% 4
Balance SheetYear - 0 Year - 1 Year - 2 Year - 3 Year - 4 Debt Schedule
Assets Year - 0 Year - 1 Year - 2 Year - 3 Year - 4Cash - 819,078 1,759,152 2,817,521 3,988,304 BOP - Debt 5,625,000 4,498,507 3,203,041 1,713,254 PPE, Gross 7,500,000 7,500,000 7,500,000 7,500,000 7,500,000 Int Expense 843,750 674,776 480,456 256,988
Acc Depreciation 1,875,000 3,750,000 5,625,000 7,500,000 EAI(eual anual insta) 1,970,243 1,970,243 1,970,243 1,970,243 PPE, Net 7,500,000 5,625,000 3,750,000 1,875,000 - EOP - Debt 5,625,000 4,498,507 3,203,041 1,713,254 -
Total Assets 7,500,000 6,444,078 5,509,152 4,692,521 3,988,304 Principle Repaid 1,126,493 1,295,466 1,489,786 1,713,254 Liabilities
Debt 5,625,000 4,498,507 3,203,041 1,713,254 - Equity 1,875,000 1,875,000 1,875,000 1,875,000 1,875,000 Retained Profit - 70,571 431,111 1,104,267 2,113,304
Total Liabilities 7,500,000 6,444,078 5,509,152 4,692,521 3,988,304 Checksum - - - - -
Cash Flow StatementYear - 0 Year - 1 Year - 2 Year - 3 Year - 4
Net Income (PAT) - 70,571 360,540 673,156 1,009,037 Depreciation - 1,875,000 1,875,000 1,875,000 1,875,000
Cash Flow From Operations - 1,945,571 2,235,540 2,548,156 2,884,037
Capex (7,500,000) - ### - ###Cash Flow from Investing (7,500,000) - ### - ###
Debt (Repayment)/Issuance 5,625,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254)Equity Addition 1,875,000
Cash Flow from Financing 7,500,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254)
Net change in Cash - 819,078 940,074 1,058,369 1,170,782
Cash - BOP 819,078 1,759,152 2,817,521 Cash - EOP 819,078 1,759,152 2,817,521 3,988,304 Checksum - - - -
Free Cash Flow - EquityYear - 0 Year - 1 Year - 2 Year - 3 Year - 4
Net Income - 70,571 360,540 673,156 1,009,037 + Depreciation - 1,875,000 1,875,000 1,875,000 1,875,000 Financing Debt (%) - For Neutral Case- Capital Expenses (7,500,000)
Inte
rest
Rate
(%
) 35.95% 10% 25% 40% 55% 95%- Debt Repayment/+ raised 5,625,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254) 12%
Cash Flow to Equity (1,875,000) 819,078 940,074 1,058,369 1,170,782 13%14%15%
Returns Analysis - Equity 16%Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 17%
FCFE (1,875,000) 819,078 940,074 1,058,369 1,170,782
Cost of Equity 20%NPV 637,490 IRR 35.95%
Debt is to be repaid in 4 equal annual installments at the end of every year
Loan 500000Rate 12%N 5
EAI -£138,704.87 Int 60000Principle R -£78,704.87
£421,295.13
