Long-term Investment Decisions

							Long –term Investment
Decision

         Prof. Ashok Banerjee
    Indian Institute of Management
                Lucknow
Issues in Investment in
infrastructure
   Irreversible.
   Long gestation period
   Demand side risks: asset specificity.
   Role of regulators.
   Tax incentives.
    Project Risk
   Technology Risks
   Procedural/Legal Risks
   Completion Risks
   Operational Risks
   Revenue Risks
   Regulatory Risks
   Political Risks
   Foreign Currency Risk
Project Financing
   Equity Financing
   Debt Financing
   Equipment Suppliers’ line of credit.
   Debt-equity ratio.
   Debt security.
   Balance sheet Vs. Project Financing
Financial Appraisal Tools


   Accounting rate of Return.
   Payback Method.
   Discounted Payback Method.
   NPV.
   IRR.
   Profitability Index.
Issues in Project Costs
   Installed capacity.
   Capital costs.
   Financial closure
   Debt-equity mix.
   Construction period.
   Time overrun.
   Costs overrun.
   Guarantees.