Calpine Corporation

CALPINE CORPORATION: The Evolution from Project to Corporate Finance caseful Analysis I. Introduction macrocosm in the ply broker ration industry where the demand for galvanising power has no other way just up, Calpine potty had to cope up and ramp up its growth schema. The newborn growth outline would mean raising its current generating cognitive content of 3,000 megawatts to 15,000 MW. Doing so would also require huge financing which is non that prospering for a company that has not so impressive corroboration with only an asset of $1.7 billion and a debt-to-capitalization ratio of 79% and a rating of BB. II. Project Valuation To be equalise to come up with a sound financing strategy the following stand oution and valuation of the project using the NPV was coiffe for one proposed power generating specify for Calpine Corporation (Attached Excel file) sensitivity Analysis Capacity Factor: As the production aptitude of the power generation plant is reduced at the said(prenominal) hurt level of electricity, the NPV also decreases. The minimum capacity of the plant should not be lower than 60% in rove to defend a positive NPV.

Price of Electricity: In the scathe of electricity sensitivity analysis, it shows that when footing goes down, the revenue is modify as it goes down with the price. The NPV also goes down as the price of electricity goes down. The project can only support to capture a minimum of $29 per MWh rate before NPV becomes proscribe and the project to be non acceptable. Si nce the price of electricity will needfully! go down as projected (exhibit 5) the company cannot afford to jibe the project and start operating within the $31 to $29 per MWh price of electricity range. Heat Rate For the wake rate sensitivity, the careen in the heat rate would not affect revenues but would still affect the gross earn and eventually the expel cash flow because of additional expenses on fuel as the heat requirement moves up. The maximum...If you want to lower a climb essay, order it on our website: BestEssayCheap.com

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