Airports, toll roads, power plants are all examples of incredibly complex endeavors, both logistically and from a financial analysis perspective.  Project finance requires specialized skills and techniques, such as modeling pre-completion costs and financing, debt facilities, sculpted debt schedules, and unique tax issues.  This three-day course covers the theory and implementation of analyzing a project finance deal through the lens of a toll road example.

Introduction to Project Finance Modeling

I. What is Financial Modeling?
II. Why Professionals Build Models
III. Which Models to Implement
IV. Basic Model Layout & Design

Exercise: Working with a Bad Model

Building a ToolKit

I. Time Value of Money Functions
II. Mathematical/Statistical Functions
III. Logical Functions
IV. Lookup Functions
V. Naming Ranges / Data Validation Lists
VI. Function Combinations

Exercise: Time Value of Money Functions
Exercise: Mathematical/Statistical Functions
Exercise: Logical functions
Exercise: Lookup Functions
Exercise: Naming Ranges / Data Validation Lists

Scenario Selectors: The first Step in a Model

I. Overview of a Scenario Selector
II. Specific Scenario Selector Setup & Use

Exercise: Scenario Selectors

Dates and Timing: The Framework for a Model

I. Overview of Dates and Timing Set Up
II. Specific Date and Timing Functions and Organization

Exercise: Dates & Timing

Core Concepts: Constructions Phase Details

I. Financing Construction: Debt and Equity
Exercise: Calculating Construction Financing, Including Interest During Construction

Core Concepts: Capex and Depreciation

I. Capital Expenditures: Setting up a schedule for CAPEX

Exercise: CAPEX Schedules

II. Depreciation Calculations

Exercise: Depreciation Functions & Methodology

III. Book Depreciation vs. Tax Depreciation

Core Concepts: Project Revenue and Cost

I. A Bottom-Up Approach
II. Flexible Approach to Project Finance Scenarios

Exercise: Calculating Revenue and Cost for a Toll Road

Core Concepts: Current and Long-Term Liabilities

I. Basic Fixed Rate Amortization

Exercise: Amortizing a Fixed Rate Loan

II. Floating Rate Amortization

Exercise: Amortizing a Floating Rate Loan

III. Revolving Credit Facilities

Exercise: Setting Up All Aspects of a Revolving Credit Facility

IV. Creating Sculpted Debt Amortization

Exercise: Sculpting Debt Using a DSCR

Core Concepts: Reserve Accounts

I. Theory and Types of Reserve Accounts
II. Example Calculation

Exercise: Setting Up a Reserve Account in a Model

Core Concepts: Triggers

I. Theory and Types of Triggers
II. Example Calculation and Cash Flow Adjustments

Exercise: Setting Up a Triggers and Their Breach Repercussions in a Model

Core Concepts: Tax

I. The Effects of Differences in Depreciation

Internal Rate of Return and Discounted Cash Flow Valuation

I. Project Flows vs. Equity Flows
II. IRR and NPV Calculations

Exercise: Calculating Project and Equity IRR/NPV

III. The Cost of Equity, Cost of Capital, & WACC

Exercise: Calculating the Correct Rates

IV. Calibrating Other Discounts: Size, Liquidity, Sovereign, and Control Risk
V. Terminal Value: Various Methodologies & Calculations

Exercise: The Differences & Sensitivity of Terminal Value Methods

Model Integrity: Ensuring Everything is Correct

I. Building Checks into the Model to Make Sure Calculations are Correct
II. Cash Checks

Output Reporting: Ensuring Everything is Understandable

I. Changing the Periodicity of Results
II. Building Snapshot Views
III. Relevant Metrics and Ratios
IV. Charting