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Drivers

Create a capital budgeting model that uses the inputs listed below. Calculate the project's feasibility in terms of NPV, IRR, and perform a se

Selected case 1

Installed capacity (MW)

Best case 220
Base case 200
Worst case 180

Capacity factor 25%

Days in one year 365 Installed capacity (MW) x Capacity factor x Days
Hours per day 24

Inflation
Expected long-term inflation Italy 1%

Price per MWh (EUR)

Best case 220
Base case 210
Worst case 200

Opex as a % of Revenue
Best case -15%
Base case -16%
Worst case 17%

Estimated initial investment (in EUR)

Best case 500,000,000
Base case 510,000,000
Worst case 520,000,000

Useful life (years) 10

Capex after year 1 3%

Financing facilities
Senior Facility (million EUR) 300,000,000
Interest rate Senior Facility 4%
Repay Senior Facility in 10 years

Repayment schedule 0 1 2 3 4
Repayment % 0% 0% 5% 10% 10%

Tax rate 30%

Residual value of the project 100,000,000

Comparable companies Leverage (D/E) Beta

Company A 70% 0.50
Company B 80% 0.40
Company C 65% 0.35

Company X beta 0.9

Market risk premium 5.5%

Risk-free rate 2.0%
 s of NPV, IRR, and perform a sensitivity analysis.

MW) x Capacity factor x Days in the year x Hours per day = Energy output (MWh)

5 6 7 8 9 10 11 12
10% 10% 10% 10% 10% 10% 10% 5%