A Capital Budgeting Worksheet for Solar Power plant investment in ECOWAS region
Himanka, Henna (2014)
HAAGA-HELIA ammattikorkeakoulu
2014
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2014120418529
https://urn.fi/URN:NBN:fi:amk-2014120418529
Tiivistelmä
This thesis concentrates on providing information about possible investments in a solar power plant in the Economic Community Of West African States region through a capital budgeting worksheet created for the case company called the Center for Renewable Energy Entreprenurship and Innovation. Through the worksheet the case company receives valuable information of the expected income and predicted cash flows of the investment as well as crucial calculations related to the investment. Calculations are done by using the most common capital budgeting techniques. The theory and the concepts behind this project are based on managerial accounting and capital budgeting principles.
The case company can use the worksheet and the analysis made through the worksheet when seeking a loan for the investment. The worksheet can be used by external parties as well such as bank representatives to evaluate solar power plant investments. The thesis includes an analysis of the possble investment implemented in Ghana because that is the location the case company is currently primarily interested in. The handbook helps the user to use the actual worksheet.
According to the analysis, an investment in solar power in Ghana, is profitable and lucrative for the investors. The expected cash flows looks promising - the company has potential to run the business operations and reinvest cash flows back into the company.
One objective in this project was to help the case company in the decision making process, which was accomplished. Another objective was to build a worksheet that would work in a long run as well, which was also achieved. With the outcome of this project the case company is able to seek a possible loan from banks because it contains an important financial plan that has been created by using the worksheet.
Most risk factors related to doing business in the target country, Ghana, are related to poor access to finance as well as to inflation, tax rates and foreign currency policies. These risk factors also have to be considered before investing.
All in all, the solar power plant investment shows a great potential and could bring more welfare to the region and increase the living standards of local people.
The case company can use the worksheet and the analysis made through the worksheet when seeking a loan for the investment. The worksheet can be used by external parties as well such as bank representatives to evaluate solar power plant investments. The thesis includes an analysis of the possble investment implemented in Ghana because that is the location the case company is currently primarily interested in. The handbook helps the user to use the actual worksheet.
According to the analysis, an investment in solar power in Ghana, is profitable and lucrative for the investors. The expected cash flows looks promising - the company has potential to run the business operations and reinvest cash flows back into the company.
One objective in this project was to help the case company in the decision making process, which was accomplished. Another objective was to build a worksheet that would work in a long run as well, which was also achieved. With the outcome of this project the case company is able to seek a possible loan from banks because it contains an important financial plan that has been created by using the worksheet.
Most risk factors related to doing business in the target country, Ghana, are related to poor access to finance as well as to inflation, tax rates and foreign currency policies. These risk factors also have to be considered before investing.
All in all, the solar power plant investment shows a great potential and could bring more welfare to the region and increase the living standards of local people.