Financial Modelling for Project Finance
Penny's book, 'Financial Modelling for Project Finance' focusses on practical modelling methods drawing on real world experience. It provides detailed self-study exercises, as well as exhaustive practical guidance, background theory, and an explanation of the real-world context driving the methodology. It covers the basics of model structure right through to practical solutions for complex circularities and PFI-style optimisations. The emphasis is on flexibility and ease of model development with minimal risk of undetected errors.
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Financial Modelling for Project Finance provides a detailed description of how to plan and build a pre-financial close Project Finance cash flow model. Providing sufficient theory to give the context for each modelling topic, it focuses on detailed practical methods. Topics covered include treatment of flexible timing assumptions, inflation, multiple currencies, circular calculations, debt and equity calculations, cover factors and IRRs and the use of the model to produce alternative base case scenarios and sensitivity cases. This edition is based on the updated 2010 second edition, produced by a new publisher following withdrawal of Euromoney from book publishing. It includes a section on optimization, covering the theory and practice of optimising revenues and/or funding structures to meet specific constraints such as cover factor and IRR requirements, whilst targeting outcomes such as lowest achievable NPV of project revenues, relevant to PFI and PPP funding structures. The workbook concludes with a series of exercises which work through the process of building a model from a set of illustrative data. Excel files illustrating topics in the book and supporting the exercises are available via the author, (contact details given in the text). Where relevant, information is given for both Excel 2003 and 2007, versions which bridge the main change in Excel functionality from menu to ribbon control.
The current edition is available from Lynch-Ayerst Publishing. This is a reprint of the 2011 second edition, comprising a complete update of the original 1997 workbook (both originally published by Euromoney.