Cemex Model Template

Cemex Model The objective of this model is to obtain electricity prices for the next 20 years (USD/kh) and then compare it to Cemex´s actual and expected prices. Prices are composed of: Financial costs and Operation Cost Financial costs (CAPACITY CHARGE) are: LVQ ROE, interest and taxes Operations Cost are: fuel cost, fix and variable maintenance and operations costs, wheeling costs and back up costs Signaling Inputs (things that can be changed) Given (Cemex give it, do not change) Goal seek (Things that have to be goal seek every time you change an input or given) Goal seek objective (Things that have to a specific value) Parameter (Things are NO given we use industry data. We can use montecarlo to see their behavior) Formulas and things that should NO be replace it Year 20 Transfer Price (Is given, but could be change for option pricing) Check comments in every sheet BLUE Orange Yellow Purple Pink Black Green (some of the coloring was removed for purpose of printing.) Steps to calculate LVQ prices 1.-EPC sheet Here we calculate constructions costs which include: cost to build the facility and the cost to finance the construction (IDC: interest during construction and ROEDC: ROE during construction) We calculated IDC with a Goal seek We have to include IDC because when we ask for money interest should be financed too, we also include ROEDC because the value of the money over the time and because it represent an opportunity cost The interest rates DC and ROEDC could be different after we complete the construction, because we have reduce some risks. Usually this kind of projects re-finance the whole project after we finish the construction or after some years of operation, where some initial risk do not longer exits or have being mitigated We assume that this project will be build in 18 MONTHS 2.-OpEXpenses sheet Here we calculate all the cost, but Financial costs or CAPACITY CHARGE In this sheet we can change the parameters and do a sensibility analysis. Also, the transfer price could be changed here. 3.-Capacity Charge Here we calculated the financial expenses. To keep it clear and simple, we assume an equal depreciation and we assume that we only have NOL during the construction stage. The propose of this BID is to give us an idea to invest or not in TEG, later we will maximize our investment proposal. This assumption is valid in a bid proposal, were the requester only want to compare equal proposals. First we calculated the debt payments (principal or and interests) Second we calculated we calculated the capacity charge. In order to do it, we have to use a Goal Seek which could have for Objective only one of the following: IRR, EBITDA/Debt, EBITDA/Interest. 4.-Evaluation Sheet Here we compare our prices to Cemex´s prices INVESTMENT Construction cost Interest during Construction Return on equity during construction TOTAL INVESTMENT FINANCING 320,000 16,331 14,876 351,207 Coface IBD TOTAL DEBT LVQ TOTAL 33% 33% 66% 34% 100% PRECOMPLETITION DEBT 113,766 113,766 227,531 EQUITY 105,600 333,131 COMPLETION 113,766 113,766 227,531 123,676 351,207 PROJECT REQ UIREMENTS Net Plant Output (MW) 230 Guaranteed Capacity charge Increase 2% Electricity bought by CFE 1% MWh Output 1,914,060 NOT TO EXCEED ANNUAL COST $ 93,144 Fuel costs Guar Net P lant H.Rate, Btu/kWh 9000-12500 Fuel Cost $/MBTu $ 0.704 $/kWh $ 0.0065 YEAR TERMS OF DEB T Cof ace Total Debt Annual interest rate Time for payment IB D 33% ######## 7.84% 16 1 33% Total Debt ######## Annual interest rate 7.84% Time for payment 12 P eriod of grace after construction Initial Debt Balance P ayment to principal Interest payment Debt Balance 113,766 6,052 8,919 14,971 107,714 Annual payment ESTIMATED COSTS (Excluding f uel costs, f or production of 230 MWs) Sales Incremental Factor 2% Capacity Charge $/kWh Cemex 99% CFE price $/kWh $/kWh 0.0314 CFE 1% 600 Total Sales 600 COGS Fuel Cost (see above) VOM Costs 5,214 Wheeling Cost 4,369 Total COGS 9,583 FOM Cost CFE Backup P ower Costs Total other expenses Carryfwd.created during construction11,116 Carry FWD in years 5 Taxable Income (Loss) Taxes 35% Net Income 1,598 5,332 6,930 (2,223) (51,494) (18,023) (31,248) Exhibit TN-1: Capital Asset Pricing Model Worksheet Source [1] K = RF + bE(Industry)(RM - RF) CAPM Formula. [2] 4.00 RF U.S. Risk Free in % Assumption. [3] 3.50 RM - RF U.S. Risk Premium in % Assumption. [4] bA(Industry) = bE(Industry) / [ 1 + (1-TC) x (D/EIndustry) ] Unlevered Beta Formula. [5] 0.30 bE(Industry) Industry Beta (Electric Utilities, v/s S&P500) MSCI industry data and Professor Harvey. [6] 0.50 D/VIndustry Average Debt-to-Value for Electric Utilities Industry Assumption. [7] 1.00 D/EIndustry Average Debt-to-Equity for Electric Utilities Industry = [6] / (1 - [6]). [8] 0.35 T Marginal Tax Rate Cemex. [9] 0.18 TC Applicable tax rate. = [8] / 2 (common approximation). [10] 0.16 bA(Industry) Industry Beta, Unlevered Application of formula [4]. [11] bE(Project) = bA(Industry) x [ 1 + (1-TC) x (D/EProject) ] Levered Beta Formula. [12] 0.67 D/VProject Project Debt-to-Value Cemex Request-for-Proposal initial capital structure. [13] 2.03 D/EProject Project Debt-to-Equity = [12] / (1 - [12]). [14] 0.44 bE(Project) Project Beta Application of formula [11]. [15] 5.54 K Project Cost of Capital 1 = [2] + [14] x [3]. 1 A more proper cost of capital analysis would adjust the capital structure as debt is paid down yearly. Exhibit TN-2: International Cost of Capital and Risk Calculator Worksheet Risk Premium Calculation for Project of Average Risk in Mexico Inputs Output Category [1] 4.00 U.S. Risk Free in % [2] 3.50 U.S. Risk Premium in % [3] 93.10 Current U.S. Credit Rating [4] 59.00 Institutional Investor Country Credit Rating (0-100) [5] 15.57 Anchored Cost of Equity Capital [6] 8.07 Country Risk Premium Industry Adjustment [7] 0.30 [8] Source Assumption. Assumption. Harvey, Erb, and Viskanta. Harvey, Erb, and Viskanta. Formula from Harvey, Erb, and Viskanta. = [5] - [2] - [1]. Industry Beta (Electric Utilities, v/s S&P500) -2.45 Sector Adjustment MSCI industry data and Professor Harvey. = [1] + [7] x [2] - [1] - [2]. 18.02 = [1] + [2] + [6] - [8]. Project Cost of Capital Exhibit TN-3: International Cost of Capital and Risk Calculator Worksheet Risk Premium Calculation for Project of Average Risk in Mexico Inputs Output Category [1] 4.00 U.S. Risk Free in % [2] 3.50 U.S. Risk Premium in % [3] 93.10 Current U.S. Credit Rating [4] 59.00 Institutional Investor Country Credit Rating (0-100) [5] 15.57 Anchored Cost of Equity Capital [6] 8.07 Country Risk Premium Industry Adjustment [7] 0.30 [8] Source Assumption. Assumption. Harvey, Erb, and Viskanta. Harvey, Erb, and Viskanta. Formula from Harvey, Erb, and Viskanta. = [5] - [2] - [1]. Industry Beta (Electric Utilities, v/s S&P500) -2.45 Sector Adjustment MSCI industry data and Professor Harvey. = [1] + [7] x [2] - [1] - [2]. Project Risk Mitigation (-10 to 10; where 10=risk completely eliminated, 0=average for country) Weights for Project of Impact on Average Risk Country in Mexico Premium Score Type of Risk OPERATING: Pre-Completion [9] 0.07 0 0.00 Construction [10] 0.03 0 0.00 Technology 0.10 OPERATING: Post-Completion [11] 0.06 8 -0.39 Supply [12] 0.02 10 -0.16 Market [13] 0.02 0 0.00 Performance/Throughput 0.10 OPERATING: Sovereign [14] 0.02 5 -0.08 Expropriation- Direct [15] 0.02 5 -0.08 Expropriation- Diversion [16] 0.06 0 0.00 Expropriation- Creeping [17] 0.15 -5 0.61 Electoral Politics [18] 0.15 -5 0.61 Legal System [19] 0.15 10 -1.21 Exchange Rate 0.55 FINANCIAL [20] 0.01 0 0.00 Changes to Cost of Capital [21] 0.05 5 -0.20 Default [22] 0.04 -10 0.32 IRR vs. WACC 0.10 ENVIRONMENTAL [23] 0.05 -5 0.20 Air pollution; Changes in Regulations 0.05 SOCIAL [24] 0.10 -10.00 0.81 Impact on Community 0.10 [25] 1.00 0.42 Sum of weights (make sure = 1.00) Project Cost of Capital 18.44 = [1] + [2] + [6] - [8] + [25]. Note: The following risks have already been incorporated above: Commercial international partners Involvement of multilateral agencies Sensitivity of Project to wars, strikes, terrorism Sensitivity of Project to natural disasters Political risk insurance PANEL A DEBT PAYMENTS Coface Total Debt Annual interest rate Time for payment Period of grace after construction Initial Debt Balance Payment to principal Interest payment Annual payment Debt Balance IBD Total Debt Annual interest rate Time for payment Period of grace after construction Initial Debt Balance Payment to principal Interest payment Annual payment Debt Balance Total Debt Balance Equity Debt/Equity Debt to Value YEAR 33% ######### 7.84% 16 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 113,766 3,802 8,919 12,722 109,963 33% ######### 7.84% 12 113,766 6,052 8,919 14,971 107,714 217,677 123,676 176% 64% 1 109,963 4,101 8,621 12,722 105,862 105,862 4,422 8,300 12,722 101,440 101,440 4,769 7,953 12,722 96,672 96,672 5,143 7,579 12,722 91,529 91,529 5,546 7,176 12,722 85,983 85,983 5,981 6,741 12,722 80,003 80,003 6,450 6,272 12,722 73,553 73,553 6,955 5,767 12,722 66,598 66,598 7,500 5,221 12,722 59,097 59,097 8,088 4,633 12,722 51,009 51,009 8,723 3,999 12,722 42,286 42,286 9,406 3,315 12,722 32,880 32,880 10,144 2,578 12,722 22,736 22,736 10,939 1,783 12,722 11,797 11,797 11,797 925 12,722 0 - - - - 107,714 6,526 8,445 14,971 101,187 207,050 123,676 167% 63% 2 101,187 7,038 7,933 14,971 94,149 195,589 123,676 158% 61% 3 94,149 7,590 7,381 14,971 86,559 183,231 123,676 148% 60% 4 86,559 8,185 6,786 14,971 78,374 169,903 123,676 137% 58% 5 78,374 8,827 6,145 14,971 69,547 155,530 123,676 126% 56% 6 69,547 9,519 5,453 14,971 60,029 140,031 123,676 113% 53% 7 60,029 10,265 4,706 14,971 49,764 123,317 123,676 100% 50% 8 49,764 11,070 3,901 14,971 38,694 105,292 123,676 85% 46% 9 38,694 11,938 3,034 14,971 26,756 85,854 123,676 69% 41% 10 26,756 12,874 2,098 14,971 13,883 64,892 123,676 52% 34% 11 13,883 13,883 1,088 14,971 42,286 123,676 34% 25% 12 32,880 123,676 27% 21% 13 22,736 123,676 18% 16% 14 - - - - - - YEAR PANEL B INCOME STATEMENT (given) (given) (given) (given) Sales Incremental Factor Capacity Charge Cemex CFE price $/kWh CFE Total Sales COGS Fuel Cost VOM Costs Wheeling Cost Total COGS Gross Margin FOM Cost CFE Backup Power Costs Total other expenses Operating Margin Depreciation in years Depreciation rate EBIT (given) Interest EBT Carryfwd.created during construction Carry FWD in years Taxable Income (Loss) Taxes Net Income Net Income Depreciation Operating Flow Long Term Debt Free Cash Flow Cost over-run (equity) SBS, S.A. FCF ROE Debt Coverage (EBITDA/debt) Debt Coverage (EBITDA/int) -11,116 5 35% 20 5% 2% $/kWh 99% $/kWh 1% 11,797 0 123,676 123,676 123,676 123,676 123,676 123,676 10% 0% 0% 0% 0% 0% 9% 0% 0% 0% 0% 0% 15 16 17 18 19 20 0.0310 58,698 0.0314 600 59,298 12,530 5,214 4,369 22,113 37,185 1,598 5,332 6,930 30,256 15,520 14,736 17,838 (3,103) (2,223) (5,326) (1,864) (1,239) (1,239) 15,520 14,281 9,854 4,427 4,427 1.09 1.70 1 0.0316 59,872 0.0323 619 60,491 12,790 5,354 4,487 22,632 37,859 1,641 5,496 7,138 30,721 15,520 46,241 17,066 29,175 (2,223) 26,952 9,433 19,742 19,742 15,520 35,262 10,627 24,635 24,635 1.11 1.80 2 0.0322 61,069 0.0333 638 61,707 13,057 5,499 4,608 23,165 38,542 1,686 5,666 7,352 31,191 15,520 46,711 16,233 30,478 (2,223) 28,255 9,889 20,589 20,589 15,520 36,109 11,460 24,649 24,649 1.13 1.92 3 0.0329 62,291 0.0344 658 62,948 13,450 5,647 4,733 23,831 39,117 1,731 5,841 7,572 31,545 15,520 47,065 15,334 31,731 (2,223) 29,508 10,328 21,403 21,403 15,520 36,923 12,359 24,565 24,565 1.14 2.06 4 0.0335 63,536 0.0354 678 64,214 13,732 5,800 4,861 24,393 39,821 1,778 6,021 7,799 32,022 15,520 47,542 14,365 33,177 (2,223) 30,954 10,834 22,343 22,343 15,520 37,863 13,328 24,535 24,535 1.16 2.23 5 0.0342 64,807 0.0367 703 65,510 14,022 5,956 4,992 24,970 40,540 1,826 6,246 8,072 32,468 15,520 47,988 13,320 34,668 34,668 12,134 22,534 22,534 15,520 38,054 14,373 23,682 23,682 1.17 2.44 6 0.0349 66,103 0.0381 729 66,833 14,443 6,117 5,127 25,687 41,146 1,875 6,479 8,354 32,792 15,520 48,312 12,194 36,119 36,119 12,641 23,477 23,477 15,520 38,997 15,499 23,498 23,498 1.18 2.69 7 0.0356 67,425 0.0395 757 68,182 14,748 6,282 5,265 26,296 41,886 1,926 6,720 8,646 33,240 15,520 48,760 10,978 37,782 37,782 13,224 24,558 24,558 15,520 40,078 16,714 23,364 23,364 1.20 3.03 8 0.0363 68,774 0.0410 785 69,559 15,062 6,452 5,407 26,921 42,637 1,978 6,970 8,948 33,689 15,520 49,209 9,668 39,541 39,541 13,839 25,702 25,702 15,520 41,222 18,025 23,197 23,197 1.22 3.48 9 0.0370 70,149 0.0425 814 70,963 15,513 6,626 5,553 27,692 43,271 2,031 7,230 9,261 34,010 15,520 49,530 8,255 41,275 41,275 14,446 26,829 26,829 15,520 42,349 19,438 22,911 22,911 1.23 4.12 10 0.0378 71,552 0.0441 844 72,397 15,843 6,805 5,703 28,352 44,045 2,086 7,500 9,586 34,459 15,520 49,979 6,731 43,248 43,248 15,137 28,111 28,111 15,520 43,631 20,962 22,669 22,669 1.24 5.12 11 0.0385 72,983 0.0458 876 73,859 16,183 6,989 5,857 29,029 44,830 2,142 7,779 9,922 34,908 15,520 50,428 5,088 45,341 45,341 15,869 29,472 29,472 15,520 44,992 22,605 22,386 22,386 1.26 6.86 12 0.0393 74,443 0.0475 908 75,351 16,666 7,178 6,015 29,859 45,493 2,200 8,069 10,269 35,223 15,520 50,743 3,315 47,428 47,428 16,600 30,828 30,828 15,520 46,348 9,406 36,942 36,942 13 0.0401 75,932 0.0492 942 76,874 17,024 7,371 6,178 30,573 46,301 2,260 8,370 10,630 35,671 15,520 51,191 2,578 48,614 48,614 17,015 31,599 31,599 15,520 47,119 10,144 36,975 36,975 14 0.0409 77,451 0.0511 977 78,428 17,392 7,570 6,345 31,307 47,121 2,321 8,682 11,002 36,118 15,520 51,638 1,783 49,856 49,856 17,450 32,406 32,406 15,520 47,926 10,939 36,987 36,987 15 0.0417 79,000 0.0530 1,014 80,013 17,909 7,775 6,516 32,200 47,813 2,383 9,005 11,389 36,424 15,520 51,944 925 51,020 51,020 17,857 33,163 33,163 15,520 48,683 11,797 36,886 36,886 16 0.0425 80,580 0.0549 1,052 81,631 18,298 7,985 6,692 32,974 48,657 2,448 9,341 11,789 36,868 15,520 52,388 52,388 52,388 18,336 34,052 34,052 15,520 49,572 49,572 49,572 17 0.0434 82,191 0.0570 1,091 83,282 18,696 8,200 6,872 33,769 49,513 2,514 9,689 12,203 37,310 15,520 52,830 52,830 52,830 18,490 34,339 34,339 15,520 49,859 49,859 49,859 18 0.0442 83,835 0.0591 1,131 84,966 19,251 8,422 7,058 34,730 50,236 2,582 10,050 12,632 37,604 15,520 53,124 53,124 53,124 18,593 34,531 34,531 15,520 50,051 50,051 50,051 19 0.0451 85,512 0.0613 1,174 86,685 19,671 8,649 7,249 35,569 51,116 2,651 10,425 13,076 38,040 15,520 53,560 53,560 53,560 18,746 34,814 34,814 15,520 50,334 50,334 50,334 20 FREE CASH FLOW for investors 0% (123,676) 18% 0.71 1.87 YEAR PANEL C DISCOUNTED FREE CASH FLOW Years Cashflow Annual risk adjusted discount Cumulative discount factor Discounted free cashflow NPV (351,207) 18.44% (351,207) (0) 1 24,136 11.68% 1.12 21,611.38 2 45,889 11.80% 1.25 ######## 3 47,569 11.95% 1.40 ######## 4 49,282 12.11% 1.57 ######## 5 51,191 12.31% 1.76 ######## 6 52,427 12.54% 1.98 ######## 7 54,496 12.81% 2.23 ######## 8 56,793 13.15% 2.53 ######## 9 59,247 13.57% 2.87 ######## 10 61,787 14.10% 3.28 ######## 11 64,593 14.79% 3.76 ######## 12 67,597 15.74% 4.35 ######## 13 55,755 16.21% 5.06 ######## 14 57,263 16.79% 5.91 9,693.91 15 58,865 17.52% 6.94 8,479.83 16 60,480 18.44% 8.22 ####### 17 49,572 18.44% 9.74 ####### 18 49,859 18.44% 11.53 ####### 19 50,051 18.44% 13.66 ####### 20 50,334 18.44% 16.18 ####### From initial investment (Exhibit 10) Set NPV = 0, use solver to find minimum Capacity Chage (this is built in with Exhibit 6 to facilitate sensitivity analysis). Project Requirements Net Plant Output (MW) Guaranteed Capacity charge Increase Guaranteed Forced Outage Rate Guaranteed SOF MWh Output NOT TO EXCEED ANNUAL COST Plant Characteristics Net Plant Output (MW) Guaranteed EFOR Guaranteed SOF MWh Output CFE Backup for Forced Outages (FO) Fixed Customer Charge, $1000 Demand Charge, $/kW-mo Fixed Cost of Backup for F.O., $1000 Total F.O. MWh Base F.O. MWh Peak F.O. Mwh Intermediate F.O. MWh Price of Base Backup Price of Peak Backup Price of Inter. Backup Total Cost of F.O. Backup , $1000 CFE Backup for Scheduled Maintenance Fixed Customer Charge, $1000s Maintenace days Demand Charge, $/kW-maint. Day Fixed Cost of Backup From CFE, $1000 Total Sched. Maint. MWh Base Sched. Maint. MWh Peak Sched. Maint. Mwh Intermediate Sched. Maint. MWh Price of Base Backup Price of Peak Backup Price of Inter. Backup Total cost: Sch.Main. Backup, $1000 FOM Costs not Incl. Backup Power Costs June 1998 FOM Price, $/Kw Curent Year FOM Costs, $/kw FOM Costs,$1000 230 2% 2% 3% 1,914,060 $ 93,144 YEAR 1 230 2% 3% ####### 0.90 0.78 2,156 40,296 13,524 3,551 23,221 0.0283 0.0362 0.0296 3,355 0.90 11 0.35 179 60,444 20,286 5,327 34,831 0.0283 0.0362 0.0296 1,977 2 230 2% 3% 1,914,060 0.92 0.81 2,223 40,296 13,524 3,551 23,221 0.0291 0.0373 0.0305 3,459 0.92 11 0.36 184 60,444 20,286 5,327 34,831 0.0291 0.0373 0.0305 2,038 3 230 2% 3% ####### 0.95 0.83 2,292 40,296 13,524 3,551 23,221 0.0300 0.0385 0.0315 3,565 0.95 11 0.37 190 60,444 20,286 5,327 34,831 0.0300 0.0385 0.0315 2,101 4 230 2% 3% ####### 0.98 0.86 2,362 40,296 13,524 3,551 23,221 0.0310 0.0397 0.0324 3,675 0.98 11 0.39 196 60,444 20,286 5,327 34,831 0.0310 0.0397 0.0324 2,166 5 230 2% 3% ####### 1.01 0.88 2,435 40,296 13,524 3,551 23,221 0.0319 0.0409 0.0334 3,789 1.01 11 0.40 202 60,444 20,286 5,327 34,831 0.0319 0.0409 0.0334 2,232 6 230 2% 3% ####### 1.05 0.91 2,526 40,296 13,524 3,551 23,221 0.0331 0.0424 0.0347 3,930 1.05 11 0.41 210 60,444 20,286 5,327 34,831 0.0331 0.0424 0.0347 2,316 7 230 2% 3% ####### 1.09 0.95 2,620 40,296 13,524 3,551 23,221 0.0343 0.0440 0.0360 4,077 1.09 11 0.43 217 60,444 20,286 5,327 34,831 0.0343 0.0440 0.0360 2,402 8 230 2% 3% ####### 1.13 0.98 2,718 40,296 13,524 3,551 23,221 0.0356 0.0456 0.0373 4,229 1.13 11 0.44 226 60,444 20,286 5,327 34,831 0.0356 0.0456 0.0373 2,491 9 230 2% 3% ####### 1.17 1.02 2,819 40,296 13,524 3,551 23,221 0.0370 0.0473 0.0387 4,386 1.17 11 0.46 234 60,444 20,286 5,327 34,831 0.0370 0.0473 0.0387 2,584 10 230 2% 3% ####### 1.21 1.06 2,924 40,296 13,524 3,551 23,221 0.0383 0.0491 0.0402 4,550 1.21 11 0.48 243 60,444 20,286 5,327 34,831 0.0383 0.0491 0.0402 2,681 11 230 2% 3% ####### 1.26 1.10 3,033 40,296 13,524 3,551 23,221 0.0398 0.0509 0.0417 4,719 1.26 11 0.50 252 60,444 20,286 5,327 34,831 0.0398 0.0509 0.0417 2,781 12 230 2% 3% ####### 1.31 1.14 3,146 40,296 13,524 3,551 23,221 0.0412 0.0528 0.0432 4,895 1.31 11 0.51 261 60,444 20,286 5,327 34,831 0.0412 0.0528 0.0432 2,884 13 230 2% 3% ####### 1.35 1.18 3,264 40,296 13,524 3,551 23,221 0.0428 0.0548 0.0448 5,078 1.35 11 0.53 271 60,444 20,286 5,327 34,831 0.0428 0.0548 0.0448 2,992 14 230 2% 3% ####### 1.41 1.23 3,385 40,296 13,524 3,551 23,221 0.0444 0.0568 0.0465 5,267 1.41 11 0.55 281 60,444 20,286 5,327 34,831 0.0444 0.0568 0.0465 3,103 15 230 2% 3% ####### 1.46 1.27 3,511 40,296 13,524 3,551 23,221 0.0460 0.0589 0.0482 5,463 1.46 11 0.57 291 60,444 20,286 5,327 34,831 0.0460 0.0589 0.0482 3,219 16 230 2% 3% ####### 1.51 1.32 3,642 40,296 13,524 3,551 23,221 0.0477 0.0611 0.0500 5,667 1.51 11 0.59 302 60,444 20,286 5,327 34,831 0.0477 0.0611 0.0500 3,339 17 230 2% 3% ####### 1.57 1.37 3,778 40,296 13,524 3,551 23,221 0.0495 0.0634 0.0519 5,878 1.57 11 0.62 314 60,444 20,286 5,327 34,831 0.0495 0.0634 0.0519 3,463 18 230 2% 3% ####### 1.63 1.42 3,919 40,296 13,524 3,551 23,221 0.0514 0.0658 0.0538 6,097 1.63 11 0.64 325 60,444 20,286 5,327 34,831 0.0514 0.0658 0.0538 3,592 19 230 2% 3% ####### 1.69 1.47 4,065 40,296 13,524 3,551 23,221 0.0533 0.0682 0.0558 6,324 1.69 11 0.66 337 60,444 20,286 5,327 34,831 0.0533 0.0682 0.0558 3,726 20 230 2% 3% ####### 1.75 1.53 4,216 40,296 13,524 3,551 23,221 0.0553 0.0708 0.0579 6,560 1.75 11 0.69 350 60,444 20,286 5,327 34,831 0.0553 0.0708 0.0579 3,865 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $/kWh $/kWh $/kWh $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $/kWh $/kWh $/kWh $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 0.52 0.58 1,598 1 $ 0.59 1,641 2 $ 0.61 1,686 3 $ 0.63 1,731 4 $ 0.64 1,778 5 $ 0.66 1,826 6 $ 0.68 1,875 7 $ 0.70 1,926 8 $ 0.72 1,978 9 $ 0.74 2,031 10 $ 0.76 2,086 11 $ 0.78 2,142 12 $ 0.80 2,200 13 $ 0.82 2,260 14 $ 0.84 2,321 15 $ 0.86 2,383 16 $ 0.89 2,448 17 $ 0.91 2,514 18 $ 0.94 2,582 19 $ 0.96 2,651 20 YEAR Fuel Cost (Petcoke) Guar Net Plant H.Rate, Btu/kWh Fuel Cost $/MBTu $/kWh Total Fuel Cost,$1000 VOM Costs Total VOM costs VOM ($/MWh) Guaranteed Limestone Consumption Tonnes/MWh $/Tonne Tonnes $1000 $/MWh $/MWh $1000 9,300 (Between 9000 and 12,500) $ 0.7039 $ 0.7185 $ 0.7335 $ 0.7556 $0.00655 $ 0.00668 $0.00682 $0.00703 $ 12,530 $ 12,790 $ 13,057 $ 13,450 $ 0.7715 $0.00717 $ 13,732 $ 0.7877 $0.00733 $ 14,022 $ 0.8114 $0.00755 $ 14,443 $ 0.8285 $0.00771 $ 14,748 $ 0.8461 $0.00787 $ 15,062 $ 0.8715 $0.00810 $ 15,513 $ 0.8900 $0.00828 $ 15,843 $ 0.9091 $0.00845 $ 16,183 $ 0.9362 $0.00871 $ 16,666 $ 0.9564 $0.00889 $ 17,024 $ 0.9770 $0.00909 $ 17,392 $ 1.0061 $0.00936 $ 17,909 $ 1.0279 $0.00956 $ 18,298 $ 1.0503 $0.00977 $ 18,696 $ 1.0815 $0.01006 $ 19,251 $ 1.1051 $0.01028 $ 19,671 $ $ 5,214 2.72 $ $ $ $ $ $ $ $ 5,354 2.80 2.34 296,679 696 0.69 1,313 0.12 776 $ $ 5,499 2.87 $ $ 5,647 2.95 $ $ 5,800 3.03 $ $ 5,956 3.11 $ $ 6,117 3.20 $ $ 6,282 3.28 $ $ 6,452 3.37 $ $ 6,626 3.46 $ $ 6,805 3.56 $ $ 6,989 3.65 $ $ 7,178 3.75 $ $ 7,371 3.85 $ $ 7,570 3.96 $ $ 7,775 4.06 $ $ 7,985 4.17 $ $ 8,200 4.28 $ $ 8,422 4.40 $ $ 8,649 4.52 0.16 $ 2.28 296,679 $ 677 $ $ $ $ 0.60 0.67 1,279 3.25 0.12 755 $ 2.41 296,679 $ 714 $ $ $ $ 0.70 1,349 0.13 797 $ 2.47 296,679 $ 734 $ $ $ $ 0.72 1,385 0.13 818 $ 2.54 296,679 $ 753 $ $ $ $ 0.74 1,423 0.14 840 $ 2.61 296,679 $ 774 $ $ $ $ 0.76 1,461 0.14 863 $ 2.68 296,679 $ 795 $ $ $ $ 0.78 1,500 0.14 886 $ 2.75 296,679 $ 816 $ $ $ $ 0.81 1,541 0.15 910 $ 2.83 296,679 $ 838 $ $ $ $ 0.83 1,583 0.15 935 $ 2.90 296,679 $ 861 $ $ $ $ 0.85 1,625 0.15 960 $ 2.98 296,679 $ 884 $ $ $ $ 0.87 1,669 0.16 986 $ 3.06 296,679 $ 908 $ $ $ $ 0.90 1,714 0.16 1,013 $ 3.14 296,679 $ 932 $ $ $ $ 0.92 1,761 0.17 1,040 $ 3.23 296,679 $ 958 $ $ $ $ 0.94 1,808 0.17 1,068 $ 3.31 296,679 $ 983 $ $ $ $ 0.97 1,857 0.18 1,097 $ 3.40 296,679 $ 1,010 $ $ $ $ 1.00 1,907 0.18 1,127 $ 3.50 296,679 $ 1,037 $ $ $ $ 1.02 1,959 0.19 1,157 $ 3.59 296,679 $ 1,065 $ $ $ $ 1.05 2,011 0.19 1,188 $ 3.69 296,679 $ 1,094 $ $ $ $ 1.08 2,066 0.20 1,220 $ 3.79 296,679 $ 1,124 $ $ $ $ 1.11 2,122 0.20 1,253 Fly Ash Disposal June '98 Var. Cost Current Year Cost Guaranteed Water Rate, m^3/MWh Current Yeat Cost per cubic meter $1,000 $/MWh Waste Water Waste Water , m^3/MWh Current Yeat Cost per cubic meter Other VOM (June'98$) Current Year Cost Other VOM Costs, $1000 Wheeling charge GWh Delivered $/kWH Total Cost From Income Statement sheet Capacity Charge Capacity Price $/kW Total Capacity Pmt., $1000 Year 20 Transfer Price, $1000 Inflation rates 1997 1.024 2018 1.027 $1000 $/MWh $/MWh $1000 $ $ $ $ 0.36 0.48 328 1.02 1.14 2,174 $ $ $ $ 0.49 337 1.17 2,233 $ $ $ $ 0.50 346 1.20 2,293 $ $ $ $ 0.52 355 1.23 2,355 $ $ $ $ 0.53 365 1.26 2,418 $ $ $ $ 0.54 375 1.30 2,484 $ $ $ $ 0.56 385 1.33 2,551 $ $ $ $ 0.57 395 1.37 2,620 $ $ $ $ 0.59 406 1.41 2,690 $ $ $ $ 0.61 417 1.44 2,763 $ $ $ $ 0.62 428 1.48 2,838 $ $ $ $ 0.64 440 1.52 2,914 $ $ $ $ 0.66 452 1.56 2,993 $ $ $ $ 0.67 464 1.61 3,074 $ $ $ $ 0.69 476 1.65 3,157 $ $ $ $ 0.71 489 1.69 3,242 $ $ $ $ 0.73 502 1.74 3,330 $ $ $ $ 0.75 516 1.79 3,419 $ $ $ $ 0.77 530 1.83 3,512 $ $ $ $ 0.79 544 1.88 3,607 1,914.06 $0.00228 $ 4,369 $ $ 1,914.06 0.00234 4,487 1,914.06 $0.00241 $ 4,608 1,914.06 $0.00247 $ 4,733 1,914.06 $0.00254 $ 4,861 1,914.06 $0.00261 $ 4,992 1,914.06 $0.00268 $ 5,127 1,914.06 $0.00275 $ 5,265 1,914.06 $0.00283 $ 5,407 1,914.06 $0.00290 $ 5,553 1,914.06 $0.00298 $ 5,703 1,914.06 $0.00306 $ 5,857 1,914.06 $0.00314 $ 6,015 1,914.06 $0.00323 $ 6,178 1,914.06 $0.00331 $ 6,345 1,914.06 $0.00340 $ 6,516 1,914.06 $0.00350 $ 6,692 1,914.06 $0.00359 $ 6,872 1,914.06 $0.00369 $ 7,058 1,914.06 $0.00379 $ 7,249 $ 0.031 $ 58,698 $ $ 0.032 59,872 $ 0.032 $ 61,069 $ 0.033 $ 62,291 $ 0.034 $ 63,536 $ 0.034 $ 64,807 $ 0.035 $ 66,103 $ 0.036 $ 67,425 $ 0.036 $ 68,774 $ 0.037 $ 70,149 $ 0.038 $ 71,552 $ 0.039 $ 72,983 $ 0.039 $ 74,443 $ 0.040 $ 75,932 $ 0.041 $ 77,451 $ 0.042 $ 79,000 $ 0.043 $ 80,580 $ 0.043 $ 82,191 $ 0.044 $ 83,835 $ 0.045 $ 85,512 $ 40,000 1998 1.025 2019 1.027 1999 1.028 2020 1.027 2000 1.027 2021 1.027 2001 1.027 2002 1.027 2003 1.027 2004 1.027 2005 1.027 2006 1.027 2007 1.027 2008 1.027 2009 1.027 2010 1.027 2011 1.027 2012 1.027 2013 1.027 2014 1.027 2015 1.027 2016 1.027 2017 1.027 INVESTMENT Construction cost Interest during Construction Return on equity during construction TOTAL INVESTMENT 320,000 16,331 14,876 351,207 FINANCING Coface IBD TOTAL DEBT SBS, S.A. TOTAL PRECOMPL. DEBT 33% 113,766 33% 113,766 66% 227,531 EQUITY 34% 105,600 100% 333,131 4 4.8% 4,029 930 8,522 620 465 465 465 15,495 5 4.8% 4,029 930 8,522 620 465 465 465 15,495 COMPL. 113,766 113,766 227,531 123,676 351,207 6 4.8% 4,029 930 8,522 620 465 465 465 15,495 7 8 4.8% 4.8% 4,029 4,029 930 930 8,522 8,522 620 620 465 465 465 465 465 465 15,495 15,495 9 4.8% 4,029 930 8,522 620 465 465 465 15,495 10 4.8% 4,029 930 8,522 620 465 465 465 15,495 11 4.8% 4,029 930 8,522 620 465 465 465 15,495 12 4.8% 4,029 930 8,522 620 465 465 465 15,495 13 4.8% 4,029 930 8,522 620 465 465 465 15,495 14 4.8% 4,029 930 8,522 620 465 465 465 15,495 15 4.8% 4,029 930 8,522 620 465 465 465 15,495 16 4.8% 4,029 930 8,522 620 465 465 465 15,495 17 4.8% 4,029 930 8,522 620 465 465 465 15,495 18 4.8% 4,029 930 8,522 620 465 465 465 15,495 19 4.8% 4,029 930 8,522 620 465 465 465 15,495 20 4.8% 4,029 930 8,522 620 465 465 465 15,495 TOTAL 100.0% 83,200 19,200 176,000 12,800 9,600 9,600 9,600 320,000 MONTH Construction cost EPC Engineering And Development Equipment Transmission Line Import Taxes Others Soft Costs Total Interest during construction Coface Initial balance Monthly disbursement Cumulative disbursement Annual interests rate Up Front Fee Management Fee Commitment Fee Balance IBD Initial balance Monthly disbursement Cumulative disbursement Annual interests rate Up Front Fee Management Fee Commitment Fee Balance Equity disbursement Initial balance Monthly disbursement ROEDC Balance 26.0% 6.0% 55.0% 4.0% 3.0% 3.0% 3.0% 100.0% 1 8.0% 6,656 1,536 14,080 1,024 768 768 768 25,600 2 4.8% 4,029 930 8,522 620 465 465 465 15,495 3 4.8% 4,029 930 8,522 620 465 465 465 15,495 NOTE: Interest during construction is not equal to interest post-contruction 33.0% 113,766 8,448 8,448 53 4 4 44 105,213 105,213 5,113 13,665 86 6 100,008 100,008 5,113 18,871 119 8 94,768 94,768 5,113 24,111 152 10 89,493 89,493 5,113 29,386 185 12 84,182 84,182 5,113 34,697 219 14 44 78,791 78,791 5,113 40,088 253 17 73,408 73,408 5,113 45,471 287 19 67,989 67,989 5,113 50,890 321 21 62,534 62,534 5,113 56,345 356 23 57,041 57,041 5,113 61,837 390 26 51,512 51,512 5,113 67,366 425 28 44 45,902 45,902 5,113 72,977 460 30 40,298 40,298 5,113 78,581 496 33 34,656 34,656 5,113 84,223 531 35 28,977 28,977 5,113 89,902 567 37 23,259 23,259 5,113 95,620 603 40 17,502 17,502 5,113 101,376 640 42 11,707 11,707 5,873 5,113 5,113 ###### 113,006 676 713 45 5,873 47 0 105,600 7,534 4 496 132 113,766 7.8% 0.5% 0.5% 0.5% 33.0% 113,766 8,448 8,448 53 4 4 44 105,213 105,213 5,113 13,665 86 6 100,008 100,008 5,113 18,871 119 8 94,768 94,768 5,113 24,111 152 10 89,493 89,493 5,113 29,386 185 12 84,182 84,182 5,113 34,697 219 14 44 78,791 78,791 5,113 40,088 253 17 73,408 73,408 5,113 45,471 287 19 67,989 67,989 5,113 50,890 321 21 62,534 62,534 5,113 56,345 356 23 57,041 57,041 5,113 61,837 390 26 51,512 51,512 5,113 67,366 425 28 44 45,902 45,902 5,113 72,977 460 30 40,298 40,298 5,113 78,581 496 33 34,656 34,656 5,113 84,223 531 35 28,977 28,977 5,113 89,902 567 37 23,259 23,259 5,113 95,620 603 40 17,502 17,502 5,113 101,376 640 42 11,707 11,707 5,873 5,113 5,113 ###### 113,006 676 713 45 5,873 47 0 105,600 7,534 4 496 132 113,766 7.8% 0.5% 0.5% 0.5% 34.0% 8,704 102 8,806 8,806 5,268 165 14,239 14,239 5,268 229 19,736 19,736 5,268 293 25,297 25,297 5,268 358 30,923 30,923 5,268 424 36,615 36,615 5,268 491 42,374 42,374 5,268 558 48,201 48,201 5,268 626 54,095 54,095 5,268 695 60,059 60,059 5,268 765 66,092 66,092 5,268 836 72,197 72,197 5,268 907 78,372 78,372 5,268 980 84,620 84,620 5,268 1,053 90,942 90,942 5,268 1,127 97,337 97,337 5,268 1,202 103,807 103,807 5,268 1,278 110,353 ###### 116,976 5,268 5,268 1,354 1,432 ###### 123,676 108,800 14,876 123,676 15.0% (All costs in US$ 1,000 unless noted) (Note: All items in this sheet are automatically calculated based on the EPC, OPExpenses and Capacity Charge sheet) Year Weight Factor Cemex Discount Factor NOT TO EXCEED ANNUAL COST $/kWh Weighted Price $/kWh (NPV@ 0.14 ) COST SUMMARY WITH TEG PROJECT Capacity Charge Fuel Cost FOM Cost VOM Costs CFE Backup Power Costs Wheeling Cost TOTAL TEG COST W/O TRANSFER PMT. TOTAL TEG COST W/O TRANSFER PMT./kWh Weighted Price $/kWh (NPV@ 0.14 ) SBS, S.A. SAVINGS NOT INCL. TRANSFER PMT . Weighted Price $/kWh (NPV@ 0.14 ) 0 $6.62 14% 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 1 10 1 11 1 12 1 13 1 14 1 15 1 16 1 17 1 18 1 19 1 20 1 0.399 0.060 ##### ##### ##### ##### ##### ##### ###### 0.0538 ###### 0.0555 ###### 0.0576 ###### 0.0597 ###### 0.0620 ###### 0.0643 ###### 0.0667 ###### 0.0691 ###### 0.0717 ###### 0.0744 ###### 0.0772 ###### 0.0800 ###### 0.0830 ###### 0.0861 ###### 0.0893 ###### 0.0927 ###### 0.0961 0.349 0.053 ##### ##### 1,598 5,214 5,332 4,369 ##### ##### ##### ##### 1,641 5,354 5,496 4,487 ##### ##### ##### ##### 1,686 5,499 5,666 4,608 ##### ##### 62,291 13,450 1,731 5,647 5,841 4,733 93,694 0.0494 63,536 13,732 1,778 5,800 6,021 4,861 95,729 0.0505 64,807 14,022 1,826 5,956 6,246 4,992 97,849 0.0516 66,103 14,443 1,875 6,117 6,479 5,127 ###### 0.0528 67,425 14,748 1,926 6,282 6,720 5,265 ###### 0.0540 68,774 15,062 1,978 6,452 6,970 5,407 ###### 0.0552 70,149 15,513 2,031 6,626 7,230 5,553 ###### 0.0565 71,552 15,843 2,086 6,805 7,500 5,703 ###### 0.0578 72,983 16,183 2,142 6,989 7,779 5,857 ###### 0.0591 74,443 16,666 2,200 7,178 8,069 6,015 ###### 0.0605 75,932 17,024 2,260 7,371 8,370 6,178 ###### 0.0618 77,451 17,392 2,321 7,570 8,682 6,345 ###### 0.0632 79,000 17,909 2,383 7,775 9,005 6,516 ###### 0.0647 80,580 18,298 2,448 7,985 9,341 6,692 ###### 0.0661 82,191 18,696 2,514 8,200 9,689 6,872 ###### 0.0676 83,835 19,251 2,582 8,422 10,050 7,058 ###### 0.0692 85,512 19,671 2,651 8,649 10,425 7,249 ###### 0.0708 0.050 5,403 ##### 6% 5,403 6,377 ##### 7% 6,377 7,399 ##### 7% 7,399 8,347 0.0044 8% 8,347 9,463 0.0050 9% 9,463 11,263 0.0059 10% 11,263 13,034 0.0069 12% 13,034 15,030 0.0079 13% 15,030 17,128 0.0090 14% 17,128 19,207 0.0101 15% 19,207 21,528 0.0114 16% 21,528 23,967 0.0126 18% 23,967 26,395 0.0139 19% 26,395 29,085 0.0153 20% 29,085 31,909 0.0168 21% 31,909 34,734 0.0183 22% 34,734 37,843 0.0200 23% 37,843 41,104 0.0217 24% 41,104 44,379 0.0234 25% 44,379 47,963 0.0253 26% 47,963 40,000 SAVINGS with NEG. SAVINGS PENALTY* YEAR 20 OWNERSHIP TRANSFER PMT. NPV OF SAVINGS & OWNERSHIP TRANSFER PMT. @ 0.14 CUMULATIVE NPV SAVINGS (to Cemex) 4,740 4,907 4,994 4,942 4,915 5,131 5,209 5,269 5,267 5,181 5,094 4,975 4,806 4,645 4,470 4,268 4,079 3,887 3,681 579 91,039 * Note: The negative savings penalty does not apply to the transfer price in year 20. 1. Using risk adjusted discount rates, students should determine the NPV. 2. A sensitivity analysis of the costruction costs is performed because there are many risks related to cost over-runs and delays which are unmitigated. Different discount rates could also be included 3. Since there is a game theory aspect here, there should be a senstivity analysis of price on NPV along the chosen discount rate. Years Cashflow Discount (Risk adjusted) Dicounted FCF NPV Cost over-run IRR Price adjustment Base Charge Rate Bid Capacity charge rate Charge plus other costs Sanity Check: NOT TO EXCEED Implied electricity cost Market rate Savings for CEMEX (351,207.20) 18.44% 0% 12.9% 0% (for sensitivity analysis) 0.0310 (Using solver, set NPV=0, Solver calculates Base charge Rate) 0.0310 0.046 1 24,135.69 21,611.38 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## 9,693.91 8,479.83 7,355.92 5,090.61 4,322.94 3,663.89 3,110.98 Teaching note Exhibit 3 93,143.507 0.0492 0.0475 91,039 (Cemex's target; presumably derived from market rate plus some premium for eliminating volatility) (Indifference price) (From exhibit) (Based on current assumptions and Charge rate bid) Sensitivity Analysis Construction Costs 0% 10% 25% 50% 75% 100% Sensitivity Analysis Bid price adjustment (Variation of bid capacity charge) $ $ $ $ $ $ NPV (35,121) (87,802) (175,604) (263,405) (351,207) NPV (151,242) (75,621) (30,248) 30,248 75,621 151,242 302,483 IRR 12.9% 12.9% 11.5% 9.8% 7.4% 5.6% 4.2% IRR 12.9% 5.6% 9.5% 11.6% 12.9% 14.2% 16.0% 19.0% 24.6% -50% -25% -10% 0% 10% 25% 50% 100% $ $ $ $ $ $ $ $