Amalas PV Park by Vassiliko Cement - Project Appraisal: Normal Scenario Table 1. Key inputs Average future EAC fuel price per ton 380 Basic EAC fuel price per ton used as the basis for electricity rates 300 Projected power generation for the Amalas 8 MW PV park in year 1, in KWh (kilowatt-hour) per annum 13,520,000 Yearly decrease in power generation due to solar panels degradation 0.5% Annual operating expenses 80,000 Capex 8,000,000 Annual depreciation for 10 years 800,000 Tax rate 12.5% Discount rate 7.0% Table 2. Monthly production profile of a SAMPLE solar park (historical data) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Current monthly power generation, in KWh 550,000 575,000 725,000 750,000 775,000 850,000 900,000 875,000 825,000 725,000 625,000 575,000 8,750,000 Monthly power generation in % to total per year 6.3% 6.6% 8.3% 8.6% 8.9% 9.7% 10.3% 10.0% 9.4% 8.3% 7.1% 6.6% 100.0% Electricity price during PV park generation, per MWh (megawatt-hour) before grid charges, taxes and levies 72.71 72.71 72.71 72.71 72.71 114.07 114.07 114.07 114.07 72.71 72.71 72.71 Net price benefit, or power cost savings, per MWh (megawatt-hour), before grid charges, taxes and levies = Electricity price in /MWh + (Average future EAC fuel price Basic EAC fuel price) 0.00024 1000 91.91 91.91 91.91 91.91 91.91 133.27 133.27 133.27 133.27 91.91 91.91 91.91 Table 3. Free Cash Flow Projections Power cost savings per month = Net price benefit (Projected power generation per annum for the Amalas PV park / 1000 Monthly power generation in %) Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total power cost savings Annual operating expenses Annual depreciation EBT Tax EAT Depreciation Capex Free cash flow Accumulated FCF Discounted FCF Accumulated discounted FCF 0 - 8,000,000 - 8,000,000 - 8,000,000 - 8,000,000 - 8,000,000 1 78,108 81,658 102,960 106,511 110,061 175,033 185,329 180,181 169,885 102,960 88,759 81,658 1,463,103 80,000 800,000 583,103 72,888 510,215 800,000 1,310,215 - 6,689,785 1,224,500 - 6,775,500 2 77,717 81,250 102,445 105,978 109,511 174,158 184,402 179,280 169,036 102,445 88,315 81,250 1,455,787 80,000 800,000 575,787 71,973 503,814 800,000 1,303,814 - 5,385,971 1,138,801 - 5,636,699 3 77,329 80,844 101,933 105,448 108,963 173,287 183,480 178,384 168,190 101,933 87,873 80,844 1,448,508 80,000 800,000 568,508 71,064 497,445 800,000 1,297,445 - 4,088,527 1,059,101 - 4,577,597 4 76,942 80,439 101,424 104,921 108,418 172,421 182,563 177,492 167,349 101,424 87,434 80,439 1,441,266 80,000 800,000 561,266 70,158 491,108 800,000 1,291,108 - 2,797,419 984,980 - 3,592,618 5 76,557 80,037 100,916 104,396 107,876 171,559 181,650 176,604 166,513 100,916 86,997 80,037 1,434,059 80,000 800,000 554,059 69,257 484,802 800,000 1,284,802 - 1,512,617 916,046 - 2,676,571 6 76,174 79,637 100,412 103,874 107,337 170,701 180,742 175,721 165,680 100,412 86,562 79,637 1,426,889 80,000 800,000 546,889 68,361 478,528 800,000 1,278,528 - 234,089 851,937 - 1,824,634 7 75,794 79,239 99,910 103,355 106,800 169,847 179,838 174,843 164,852 99,910 86,129 79,239 1,419,755 80,000 800,000 539,755 67,469 472,285 800,000 1,272,285 1,038,196 792,315 - 1,032,319 8 75,415 78,843 99,410 102,838 106,266 168,998 178,939 173,969 164,027 99,410 85,698 78,843 1,412,656 80,000 800,000 532,656 66,582 466,074 800,000 1,266,074 2,304,270 736,867 - 295,452 9 75,038 78,448 98,913 102,324 105,735 168,153 178,044 173,099 163,207 98,913 85,270 78,448 1,405,593 80,000 800,000 525,593 65,699 459,894 800,000 1,259,894 3,564,164 685,299 389,846 10 74,662 78,056 98,419 101,812 105,206 167,312 177,154 172,233 162,391 98,419 84,844 78,056 1,398,565 80,000 800,000 518,565 64,821 453,744 800,000 1,253,744 4,817,908 637,340 1,027,186 11 74,289 77,666 97,926 101,303 104,680 166,476 176,268 171,372 161,579 97,926 84,419 77,666 1,391,572 80,000 - 1,311,572 163,946 1,147,625 - 1,147,625 5,965,533 545,229 1,572,415 12 73,918 77,278 97,437 100,797 104,157 165,643 175,387 170,515 160,771 97,437 83,997 77,278 1,384,614 80,000 - 1,304,614 163,077 1,141,537 - 1,141,537 7,107,070 506,856 2,079,271 13 73,548 76,891 96,950 100,293 103,636 164,815 174,510 169,663 159,968 96,950 83,577 76,891 1,377,691 80,000 - 1,297,691 162,211 1,135,480 - 1,135,480 8,242,550 471,184 2,550,454 14 73,180 76,507 96,465 99,791 103,118 163,991 173,638 168,814 159,168 96,465 83,159 76,507 1,370,802 80,000 - 1,290,802 161,350 1,129,452 - 1,129,452 9,372,002 438,021 2,988,475 15 72,814 76,124 95,983 99,292 102,602 163,171 172,769 167,970 158,372 95,983 82,744 76,124 1,363,948 80,000 - 1,283,948 160,494 1,123,455 - 1,123,455 10,495,457 407,192 3,395,667 16 72,450 75,744 95,503 98,796 102,089 162,355 171,905 167,130 157,580 95,503 82,330 75,744 1,357,129 80,000 - 1,277,129 159,641 1,117,488 - 1,117,488 11,612,944 378,532 3,774,199 17 72,088 75,365 95,025 98,302 101,579 161,543 171,046 166,295 156,792 95,025 81,918 75,365 1,350,343 80,000 - 1,270,343 158,793 1,111,550 - 1,111,550 12,724,495 351,888 4,126,087 18 71,728 74,988 94,550 97,810 101,071 160,736 170,191 165,463 156,008 94,550 81,509 74,988 1,343,591 80,000 - 1,263,591 157,949 1,105,642 - 1,105,642 13,830,137 327,120 4,453,207 19 71,369 74,613 94,077 97,321 100,565 159,932 169,340 164,636 155,228 94,077 81,101 74,613 1,336,873 80,000 - 1,256,873 157,109 1,099,764 - 1,099,764 14,929,901 304,094 4,757,301 20 71,012 74,240 93,607 96,835 100,063 159,132 168,493 163,813 154,452 93,607 80,696 74,240 1,330,189 80,000 - 1,250,189 156,274 1,093,915 - 1,093,915 16,023,817 282,689 5,039,989 Table 4. Project Appraisal Cell Y44, which is the sum of accumulated discounted cash flows, should show the same cash flow as shown in cell B47, the Net Present Value (the latter calculated using the NPV function of Excel). Net present value NPV 5,039,989 =NPV(B12,V25:V44)+V24 Internal rate of return IRR 14.69% =IRR(V24:V44) Profitability Index 1.63 =(B47+B9)/B9 Payback in full years 7 Discounted payback in full years 9 Table 5. Sensitivity Analysis for NPV as Function of Discount Rate =B47 0% 16,023,817 {=TABLE(,B12)} 1% 13,757,533 2% 11,787,643 3% 10,068,892 4% 8,563,657 5% 7,240,560 6% 6,073,347 7% 5,039,989 8% 4,121,944 9% 3,303,555 10% 2,571,567 11% 1,914,723 12% 1,323,432 13% 789,504 14% 305,922 14.69% - 16% - 533,480 17% - 898,980 18% - 1,233,728 19% - 1,541,097 20% - 1,824,028 Unlevered free cash flow is a measure of how much cash is available to repay debt and equity holders. In other words, it is the amount of cash a firm generates before paying creditors (By paying interest and principal) and equity holders (By paying dividends and repurchasing shares). It is calculated in the following way: 1) Project Earnings Before Interest and Taxes (EBIT) aka operating income. This can be done either by projecting revenue and assuming an EBIT margin or by projecting revenue and operating expenses (Such as rent, wages, depreciation, salaries, cost of goods sold, selling general and administrative expenses), the difference of which will be EBIT. 2) Apply the tax rate to get to Net Operating Profit After Taxes (NOPAT) 3) After we get to NOPAT, we need to account for items in three different categories (All of which may be found on the cash flow statement) a) Add back non-cash charges. These are non-cash expenses that are included in EBIT and therefore lower the tax base. Examples include depreciation, amortization, and stock-based compensation. b) Subtract the increase in operating working capital. Working capital is current assets - current liabilities. Operating working capital is current assets (Excluding cash and cash equivalents such as short-term investments) minus current liabilities (Excluding debt) c) Subtract capital expenditures