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.
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