20-Mar-2024

Financial Modelling &

Project Evaluation (Part 3)
CE657 : Construction Economics and
Infrastructure Financing
Instructor: Chirag Kothari
Department of Civil Engineering
 Cash flow distribution
Cash Interest,(i) Taxes Paid ,(t)
Expenses,(e) % of debt [Tax Rate] X TI

Revenues (EBITDA) Taxable (Tax Credits)

(r) Gross Profit EBIT Income (TI)
Project
Ops (r)-(e) = (r)-(e)-(d) = (r)-(e)-(d)-(i)

CE657 - 2024 - Chirag Kothari, IIT Kanpur

Net Cash Flow

Depreciation
(d) Debt
Noncash expenses
deductible for tax purposes.
(+) Service
Principal (p)
Amortization

Cash Flow After Tax

= (-)
(r)-(e)-(d)-(i)-(t)+(d)-(p)
Source: Adopted from Prof. Mcloed’s class (CFAT)
20-Mar-2024 Lecture 15 – Project financing – Financial Modelling (Part 3) 2
 Cash and Debt Distribution for Cogen Project
Passive Engg.
Limited Investors Firm
Partners

Utility
Equity
Investors

CE657 - 2024 - Chirag Kothari, IIT Kanpur

Cogen
Company
(Partnership)

Lenders General Engg.

($81.5M) Partners Utility
Firm
(Sponsors)

20-Mar-2024 Lecture 15 – Project financing – Financial Modelling (Part 3) 3

 Goal 1 : Calculate IRR for a passive investor

Goal 2 : Calculate IRR for project sponsor

CE657 - 2024 - Chirag Kothari, IIT Kanpur

20-Mar-2024 Lecture 15 – Project financing – Financial Modelling (Part 3) 4
 CE657 - 2024 - Chirag Kothari, IIT Kanpur
20-Mar-2024 Lecture 15 – Project financing – Financial Modelling (Part 3) 5