Sur fertilizer project is sponsored by a leading business conglomerate in Oman They are trying to decide on the best optimal capital structure for the fertilizer project. Assume sponsors want a minimum return of 20% Assume that from lenders point of view the minimum acceptable rate is 10% Assume that DSCR ( debt service cover ratio ) should be more than 2 Formula for DSCR = (OCF) / (Interest paid in that year + Debt Repayment in that year). Assume taxes are zero. CAPEX OCF1 OCF2 OCF3 OCF4 OCF5 -25,000 10,000 10,000 10,000 10,000 10,000 1 Questions What is the optimal capital structure Equity IRR? 3 Debt IRR? 4 DSCR? 2 Sur fertilizer project is sponsored by a leading business conglomerate in Oman They are trying to decide on the best optimal capital structure for the fertilizer project. Assume sponsors want a minimum return of 20% Assume that from lenders point of view the minimum acceptable rate is 10% Assume that DSCR ( debt service cover ratio ) should be more than 2 Formula for DSCR = (OCF) / (Interest paid in that year + Debt Repayment in that year). Assume taxes are zero. CAPEX OCF1 OCF2 OCF3 OCF4 OCF5 -25,000 10,000 10,000 10,000 10,000 10,000 1 Questions What is the optimal capital structure Equity IRR? 3 Debt IRR? 4 DSCR? 2