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Project Finance Assignment

 
After years of complaints from motorists living in Manly and on Sydney’s Northern Beaches, the NSW Government has finally decided to improve traffic on one of Sydney’s most congested roads. Through a competitive tender process, the government will award the right to design, construct, finance and maintainthe Middle Harbour Tunnel, twin 2.5km two lane tunnels (as outlined in the diagram above). The winning bidder will have an exclusive 10 year period to build the road and then have access all tolling revenue (initial toll to be set by the Government and then only able to increase at CPI).
 
The Macquarie Student Fund has been asked if it would like to be an investor in a consortium that is bidding for the Project. As an analyst for the Macquarie Student Fund, you have been provided a financial model which you will need to analyse and run some sensitivities. You will also be required to prepare some of the sections of an Investment Committee that will be presented to the head of your Investment Committee, Lurion De Mello.
 
The Consortium you’ve been invited into has a well-known Canadian construction company who has strong credentials in building roads in North America. This will be their first project in Australia. They will sign a fixed price, fixed time contract to deliver the Middle Harbour Tunnel. The project will then use an Australian traffic specialist during operations.

The project will be funded with a mixture of debt and equity.
 
This is an individual assignment with a due dateof 4pm 15th October2014.
 
There are two parts to the assignment.
 
1. Analysis of the Model – Excel based – This includes analysing the model, running sensitivities, running key equity calculations, creating a graph and populating a sources & uses table.
 
2. Investment Committee–This includes populating an investment committee paper, describing the key project risks, and providing a recommendation on the investment opportunity.
Further information on both parts of the assignment is provided below
 

Part 1 – Analysing the model (Worth 30%)

 

Key Metrics

 
• Populate the highlighted cells in rows 75 & 76 on the ‘FinStats’ tab
• Calculate the equity IRR in cell G81 of the ‘FinStats’ tab
• Calculate the equity NPV in cell G86 of the ‘FinStats’ tab
• Populate the highlighted cells in rows 84 & 85 on the ‘Calculations’ tab
• Calculate the Minimum DSCR in cell G87 of the ‘Calculations’ tab
• Calculate the Average DSCR in cell G89 of the ‘Calculations’ tab
• Insert a column chart at the bottom of the ‘Calculation’ tab showing the DSCR’s. The charts should have a title, axis labelled and a legend
• Calculate the average annual equity yield for different periods of operations
 

Sensitivities

 
• The current model is called the base case. On the ‘Sensitivities’ there is 5 sensitivities that need running.
• For each sensitivity, change the relevant cell in the ‘Inputs’ tab and then copy the results into the sensitivities table.
• Populate cells D5:D9 and F5:F9 on the ‘Sensitivities’ tab with the difference to the base case
 

Sources & Uses

 
• Populate the Sources & Uses table onthe ‘Sensitivities’ tab
 

Modelling Mistakes

 
• There is a number of errors in the model. Identify them and describe them in the ‘Sensitivities’ tab. Do not fix them in the model
 

Part 2–Investment Committee Paper (Worth 70%)

 
All investments that the Macquarie Student Fund considers must be presented to the Investment Committee. This involves preparing a paper that summarises some of the key aspects and risks of the project.
As an analyst, you will need to consider what sort of risks

Product code: Finance-AW513

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