Economic Value-Added Creation by Optimizing Capital Structure in Project Finance
Journal Title: International Journal of Applied Research in Management and Economics - Year 2020, Vol 3, Issue 2
Abstract
Infrastructure Projects are large investment by the public and/or private sector that required enormous financial resource commitment to build physical asset and facilities needed for economic development so that the company need project financing to support with. Project finance is based on debt repayment from project companiesâ revenue and not on the sponsors or the developerâs balance sheet, so the project companies should assure the cash flow is sufficient for debt repayment and dividend payment. Beside that investors still have to analyze the value created in that project with highest positive Economic Value Added. Net Operating Profit After Tax (NOPAT) need to cover cost of invested capital to create value so that the ratio of NOPAT to total Project Cost (Return on Invested Capital) is should be more than the weighted average cost of capital (WACC). The capital structure doesnât have an optimum weight and cost as long as the Return on Invested Capital (ROIC) higher than WACC.
Authors and Affiliations
Bryan Charisma ,Encep Amir,
Keywords
Related Articles
- EP ID EP745332
- DOI https://doi.org/10.33422/ijarme.v3i2.446
- Views 50
- Downloads 0
A bi-objective model for determining an optimal warehouse capacity, and product allocation in a green multi-product, multi-period distribution network
Nowadays, the growing trend of environmental concerns is significantly higher than in the past while the business also focuses on the supply chain more to serve the customer demand using the lowest resources possible whi...
The Effects of COVID-19 Pandemic on Working Life: An Evaluation on Individual and Organizational Competencies
In a rapidly changing world, people need to create differences in order to participate in the labor market, and in the same way, for businesses to remain strong in the market. Especially due to the high uncertainties cau...
The Fluctuations of Bitcoin Price during the Hacks
Security breaches of the cryptocurrency exchanges usually cause the price fluctuation in the market. Approximately one hundred cryptocurrency thefts, including hacks and scams, has occurred since 2012 to 2018, half of wh...
Perceived Organisational Support Towards Psychological Capital and Organisational Thriving in Lithuania
This study examines the interconnectedness of positive organisational resources at three levels through a cross-sectional analysis of 408 participants from various organisations in Lithuania. It investigates the relation...
Blockchain in Corporate Finance: A Review of Use-Case, Opportunities and Risks
In the era of the digital revolution, organizations are surrounded by disruptive technologies and find themselves constantly in the middle of change processes. In recent years, blockchain technology has evolved tremendou...