Private Organisation Water Treatment Plant WPT A Water Treatment Plant (WPT) is proposed by a private organization to be built under a concession of 18 years. The plant will be built in 2 phases as follows
Phase 1: 2 year construction period with a CAPEX of $12 million and an operation and maintenance period of 16 years at a cost of $300,000 per year. Revenue is expected to be
$1.3million per year on a contract led basis
Phase 2: 1 year construction period with a CAPEX of $4 million to begin in year 6 of the concession period. Operation and maintenance costs will be $200,000 per year and revenue is expected to be $600, 000 per year on a market-led basis
1) Develop a cumulative cash flow for the whole project and compute the internal rate of
Return (IRR), Net Present Value (NPV), Cash lock up (CLU) and Payback Period (PP)
Based on a Debt-Equity (d/E) choice of your own
2) Assess the optimistic and pessimistic cases by considering the risks in each phase and compute the irr’s and npv’s for each case
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