Description
An excel spreadsheet showing the working of AES - Cost of Capital Case.
COST OF CAPITAL CALCULATION Risk Scores Construction Operation / Technical Regulatory Business / Project LoB Tax rate Debt to Cap. EBIT Coverage Default spread Sovereign spread Currency 3 2 2 3 1 1 2 3 3 1 3 3 2 3 3 3 2 3 1 2 2 3 2 1
Andres Caracoles Drax Eletropaulo Gener Haripur Kelvin Lal Pir Los Mina OPGC Ottana Red Oak Rovnoloberg Telasi Uruguainia
CG CS LU CG CG CG CG CG CG CG CS CG GD GD CG
25.0% 35.0% 0.0% 34.0% 17.0% 0.0% 25.0% 23.0% 25.0% 7.9% 35.0% 37.5% 30.0% 20.0% 34.0%
35.1% 40.8% 29.5% 30.0% 35.2% 33.3% 32.9% 35.1% 28.7% 30.4% 42.5% 39.5% 36.5% 26.1% 32.2%
3.0x 3.0x 3.0x 3.5x 2.5x 2.5x 2.5x 3.0x 4.0x 3.0x 2.5x 3.0x 2.5x 4.0x 4.0x
3.57% 3.57% 3.57% 2.89% 4.34% 4.34% 4.34% 3.57% 1.85% 3.57% 4.34% 3.57% 3.57% 1.85% 1.85%
8.93% 16.25% 0.00% 8.93% 1.73% 5.23% 3.14% 9.90% 8.93% 3.60% 0.14% 0.00% 9.98% 9.98% 8.93%
3 3 2 1-
3 2 2 1 1 3 1
-
22
-
Risk Scores Counterpart y Commodity Contract enf./ legal Beta unlevered 3 1 3 2 2 1 1 3 0.25 0.50 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.50 0.25 0.25 0.25 0.25 Beta levered 0.39 0.84 0.35 0.36 0.39 0.37 0.37 0.39 0.35 0.36 0.87 0.41 0.39 0.34 0.37
Calculations Cost of Equity 16.1% 26.7% 7.0% 15.9% 8.9% 12.4% 10.2% 17.1% 15.9% 10.6% 10.7% 7.4% 17.2% 16.8% 16.0% Cost of Debt 17.0% 24.3% 8.1% 16.3% 10.6% 14.1% 12.0% 18.0% 15.3% 11.7% 9.0% 8.1% 18.1% 16.3% 15.3% Adjusted WACC 29.9% 31.4% 14.6% 25.3% 12.6% 16.9% 15.2% 23.1% 27.4% 18.1% 10.8% 9.7% 18.6% 28.5% 25.2%
Simple WACC
3 2 1 1 1 2 1 3 3 3 3 1 3 2
3 2 2 3 1 12 3 23 3
-
2 3 2
14.9% 22.2% 7.3% 14.4% 8.9% 12.9% 9.8% 16.0% 14.6% 10.7% 8.6% 6.5% 15.6% 15.9% 14.1%
x Select financial information 10 yr treasury bond US risk premium Unelevered equity betas by LoB CG LU GD CS
4.5% 7.0% 0.25 0.25 0.25 0.50
x Project specific risk weightages Construction Operation / Technical Regulatory Currency Counterparty Contract enf./ legal Commodity
14.5% 3.5% 10.5% 21.5% 7.0% 25.0% 18.0%
Lal Phir project x Proj in Pak (in $mn) Net Profit Dep Tax sheild Interest Tax Sheild Maintenance Capex FCF NPV x Proj in US (in $mn) Net Profit Dep Tax sheild Interest Tax Sheild Maintenance Capex FCF NPV x Plant in Pak D/V ? Rf Rp Sov Spd Re Default Spread Rd WACC Tax rate 2004 16.4 7.0 34.0 12.5 44.9 192.4 2004 16.4 11.5 27.6 12.5 42.9 400.7 2005 17.2 7.2 32.9 12.5 44.8 2006 18.0 7.3 31.6 12.6 44.4 2007 19.0 7.5 30.3 12.6 44.2 2008 20.0 7.6 28.9 12.7 43.8 2009 21.2 7.8 27.3 12.7 43.5 2010 22.4 7.9 25.6 12.8 43.1
2005 17.2 11.7 26.7 12.5 43.1
2006 18.0 12.0 25.7 12.6 43.1
2007 19.0 12.2 24.6 12.6 43.2
2008 20.0 12.4 23.4 12.7 43.2
2009 21.2 12.7 22.1 12.7 43.3
2010 22.4 12.9 20.8 12.8 43.3
0.35 0.39 0.05 0.07 0.09 0.16 0.04 0.17 22% 23%
Plant in US D/V ? Rf Rp Sov Spd Re Default Spread Rd WACC
0.35 0.39 0.05 0.07 0.00 0.07 0.00 0.05 9% 38%
Weights Scores as per Lal Pir Risk Premium Scores of Red oak Risk Premium
Deprectation Interest
30.6 44.1
31.3 42.7
31.9 41.1
32.5 39.4
33.1 37.5
33.8 35.4
34.4 33.2
2011 23.9 8.1 23.6 12.8 42.8
2012 25.4 8.2 21.6 12.9 42.3
2013 27.2 8.3 19.3 12.9 41.9
2014 29.1 8.5 16.8 12.9 41.5
2015 31.3 8.6 14.0 13.0 41.0
2016 33.8 8.8 11.0 13.0 40.6
2017 36.2 9.0 7.6 13.1 39.7
2018 39.1 9.1 4.0 13.1 39.1
2019 42.3 9.3 0.0 13.2 38.4
2020 42.1 9.4 0.0 13.2 38.3
2011 23.9 13.2 19.2 12.8 43.5
2012 25.4 13.4 17.5 12.9 43.4
2013 27.2 13.6 15.6 12.9 43.5
2014 29.1 13.9 13.6 12.9 43.7
2015 31.3 14.1 11.4 13.0 43.8
2016 33.8 14.4 8.9 13.0 44.1
2017 36.2 14.6 6.2 13.1 43.9
2018 39.1 14.9 3.3 13.1 44.1
2019 42.3 15.1 0.0 13.2 44.2
2020 42.1 15.3 0.0 13.2 44.2
Project Specific Risk 14.5 3.5 1 0 3.5 2 0 7
10.5 2 21 0
21.5 2 43 0
7 1 7 3 21
25 2 50 0
18 1 18 2 36
0.07125 0.032
35.1 30.7
35.7 28.0
36.3 25.0
37.0 21.8
37.6 18.2
38.3 14.3
39.0 9.9
39.6 5.2
40.3 0.0
40.9 0.0
2021 41.9 9.6 0.0 13.3 38.2
2022 41.8 9.7 0.0 13.3 38.2
2023 41.6 9.9 0.0 13.4 38.1
2021 41.9 15.6 0.0 13.3 44.2
2022 41.8 15.9 0.0 13.3 44.4
2023 41.6 16.1 0.0 13.4 44.3
41.6 0.0
42.3 0.0
42.9 0.0
doc_978810040.xls
An excel spreadsheet showing the working of AES - Cost of Capital Case.
COST OF CAPITAL CALCULATION Risk Scores Construction Operation / Technical Regulatory Business / Project LoB Tax rate Debt to Cap. EBIT Coverage Default spread Sovereign spread Currency 3 2 2 3 1 1 2 3 3 1 3 3 2 3 3 3 2 3 1 2 2 3 2 1
Andres Caracoles Drax Eletropaulo Gener Haripur Kelvin Lal Pir Los Mina OPGC Ottana Red Oak Rovnoloberg Telasi Uruguainia
CG CS LU CG CG CG CG CG CG CG CS CG GD GD CG
25.0% 35.0% 0.0% 34.0% 17.0% 0.0% 25.0% 23.0% 25.0% 7.9% 35.0% 37.5% 30.0% 20.0% 34.0%
35.1% 40.8% 29.5% 30.0% 35.2% 33.3% 32.9% 35.1% 28.7% 30.4% 42.5% 39.5% 36.5% 26.1% 32.2%
3.0x 3.0x 3.0x 3.5x 2.5x 2.5x 2.5x 3.0x 4.0x 3.0x 2.5x 3.0x 2.5x 4.0x 4.0x
3.57% 3.57% 3.57% 2.89% 4.34% 4.34% 4.34% 3.57% 1.85% 3.57% 4.34% 3.57% 3.57% 1.85% 1.85%
8.93% 16.25% 0.00% 8.93% 1.73% 5.23% 3.14% 9.90% 8.93% 3.60% 0.14% 0.00% 9.98% 9.98% 8.93%
3 3 2 1-
3 2 2 1 1 3 1
-
22
-
Risk Scores Counterpart y Commodity Contract enf./ legal Beta unlevered 3 1 3 2 2 1 1 3 0.25 0.50 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.50 0.25 0.25 0.25 0.25 Beta levered 0.39 0.84 0.35 0.36 0.39 0.37 0.37 0.39 0.35 0.36 0.87 0.41 0.39 0.34 0.37
Calculations Cost of Equity 16.1% 26.7% 7.0% 15.9% 8.9% 12.4% 10.2% 17.1% 15.9% 10.6% 10.7% 7.4% 17.2% 16.8% 16.0% Cost of Debt 17.0% 24.3% 8.1% 16.3% 10.6% 14.1% 12.0% 18.0% 15.3% 11.7% 9.0% 8.1% 18.1% 16.3% 15.3% Adjusted WACC 29.9% 31.4% 14.6% 25.3% 12.6% 16.9% 15.2% 23.1% 27.4% 18.1% 10.8% 9.7% 18.6% 28.5% 25.2%
Simple WACC
3 2 1 1 1 2 1 3 3 3 3 1 3 2
3 2 2 3 1 12 3 23 3
-
2 3 2
14.9% 22.2% 7.3% 14.4% 8.9% 12.9% 9.8% 16.0% 14.6% 10.7% 8.6% 6.5% 15.6% 15.9% 14.1%
x Select financial information 10 yr treasury bond US risk premium Unelevered equity betas by LoB CG LU GD CS
4.5% 7.0% 0.25 0.25 0.25 0.50
x Project specific risk weightages Construction Operation / Technical Regulatory Currency Counterparty Contract enf./ legal Commodity
14.5% 3.5% 10.5% 21.5% 7.0% 25.0% 18.0%
Lal Phir project x Proj in Pak (in $mn) Net Profit Dep Tax sheild Interest Tax Sheild Maintenance Capex FCF NPV x Proj in US (in $mn) Net Profit Dep Tax sheild Interest Tax Sheild Maintenance Capex FCF NPV x Plant in Pak D/V ? Rf Rp Sov Spd Re Default Spread Rd WACC Tax rate 2004 16.4 7.0 34.0 12.5 44.9 192.4 2004 16.4 11.5 27.6 12.5 42.9 400.7 2005 17.2 7.2 32.9 12.5 44.8 2006 18.0 7.3 31.6 12.6 44.4 2007 19.0 7.5 30.3 12.6 44.2 2008 20.0 7.6 28.9 12.7 43.8 2009 21.2 7.8 27.3 12.7 43.5 2010 22.4 7.9 25.6 12.8 43.1
2005 17.2 11.7 26.7 12.5 43.1
2006 18.0 12.0 25.7 12.6 43.1
2007 19.0 12.2 24.6 12.6 43.2
2008 20.0 12.4 23.4 12.7 43.2
2009 21.2 12.7 22.1 12.7 43.3
2010 22.4 12.9 20.8 12.8 43.3
0.35 0.39 0.05 0.07 0.09 0.16 0.04 0.17 22% 23%
Plant in US D/V ? Rf Rp Sov Spd Re Default Spread Rd WACC
0.35 0.39 0.05 0.07 0.00 0.07 0.00 0.05 9% 38%
Weights Scores as per Lal Pir Risk Premium Scores of Red oak Risk Premium
Deprectation Interest
30.6 44.1
31.3 42.7
31.9 41.1
32.5 39.4
33.1 37.5
33.8 35.4
34.4 33.2
2011 23.9 8.1 23.6 12.8 42.8
2012 25.4 8.2 21.6 12.9 42.3
2013 27.2 8.3 19.3 12.9 41.9
2014 29.1 8.5 16.8 12.9 41.5
2015 31.3 8.6 14.0 13.0 41.0
2016 33.8 8.8 11.0 13.0 40.6
2017 36.2 9.0 7.6 13.1 39.7
2018 39.1 9.1 4.0 13.1 39.1
2019 42.3 9.3 0.0 13.2 38.4
2020 42.1 9.4 0.0 13.2 38.3
2011 23.9 13.2 19.2 12.8 43.5
2012 25.4 13.4 17.5 12.9 43.4
2013 27.2 13.6 15.6 12.9 43.5
2014 29.1 13.9 13.6 12.9 43.7
2015 31.3 14.1 11.4 13.0 43.8
2016 33.8 14.4 8.9 13.0 44.1
2017 36.2 14.6 6.2 13.1 43.9
2018 39.1 14.9 3.3 13.1 44.1
2019 42.3 15.1 0.0 13.2 44.2
2020 42.1 15.3 0.0 13.2 44.2
Project Specific Risk 14.5 3.5 1 0 3.5 2 0 7
10.5 2 21 0
21.5 2 43 0
7 1 7 3 21
25 2 50 0
18 1 18 2 36
0.07125 0.032
35.1 30.7
35.7 28.0
36.3 25.0
37.0 21.8
37.6 18.2
38.3 14.3
39.0 9.9
39.6 5.2
40.3 0.0
40.9 0.0
2021 41.9 9.6 0.0 13.3 38.2
2022 41.8 9.7 0.0 13.3 38.2
2023 41.6 9.9 0.0 13.4 38.1
2021 41.9 15.6 0.0 13.3 44.2
2022 41.8 15.9 0.0 13.3 44.4
2023 41.6 16.1 0.0 13.4 44.3
41.6 0.0
42.3 0.0
42.9 0.0
doc_978810040.xls