The following assignment should be no more than 1000 words in length. Referencing, text in diagrams and tables and bibliography are not included in the word count. No appendices to be included to the assignment or photographic images.

A private charity organisation in a developing country proposes to build and operate a tannery. The tannery will purchase hides from local farmers, process them and then sell to overseas hard currency buyers.

The tannery has an estimated CAPEX of US$20 million and an OPEX of US$2 million per year. The project will take 2 years to construct and have an operational life of 15 years before being decommissioned. The estimated annual revenue is US$8 million.

Project Finance is expected to be 75% debt and 25% equity.

Assess the project and develop cash flow tables and cumulative cash flow diagrams for the base case and worst case and calculate the Debt Service Coverage Ratio for the worst case.

Interest rates are expected to be 6%.