Latin American Hydroelectricity Research :: essays papers

Latin the Statesn Hydroelectricity ResearchFinancial Analysis of Latin the States Opportunity The following is an illustration of the financial feasibility of a joint venture hydro electricity power plant project in Central America. Estimating the estimated courts of our proposed project, our group chose to use community Edison as a comparison. Commonwealth Edison, a subsidiary of Unicom Corp, is used as an assessment of our hypothetical costs of providing electricity for Central America. Using Commonwealth Edison we feel provides a good round of the validity of estimated costs our corporation would incur. Generally Accepted Accounting Principals (GAAP), used by all U.S. corporations, is the highest standard in the world in determining the validity of a corporations financial statements. In the subsequent paragraphs, we will demonstrate costs of the joint venture project. Future growth rates in Central America market share for electricity will be projected as well. One of the benefits that our corporation will have in expansion to Central America is a lower cost of capital. A substantially larger pool of investors would provide a larger supply of loanable funds. Having a greater selection of borrowers in the international market will reduce the cost of starting our firm in Central America. Portfolio diversification is another advantage that our firm will attain, in regards to foreign investment in the financing of our project. The projections of the percentage of debt our firm will incur will be discussed in the following paragraphs. In looking at the average debt to equity ratio (D/E) of hydroelectric firms in the U.S., we feel that a 67% debt / 33% equity structure would be feasible to initially propel our firm in Central America. To use a comparison, Commonwealth Edisons plant and equipment assets resume $28.245 billion. Com Ed provides electricity for over 6.5 million residents in Chicago, and other segments of Illinois. The total popul ation of Central America - (Belize, Costa Rica, El Salvador, Guatemala, Honduras, Panama, and Nicaragua) total to 35.5 million. Taking account these statistics, plant and equipments costs for our firm providing the Central American region would cost $154.22 billion. Using this cost estimate, we would finance $103.33 billion though new market issuance in the U.S. 30 -year Treasury market. At a $100,000/ per U.S. Treasury fond regard face amount, we would need to have access to 1.03 million 30 yr bond contracts, at the prevailing market interest rate of 6.