Sur fertilizer project is sponsored by a leading business conglomerate in Oman They are trying to...

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Sur fertilizer project is sponsored by a leading business conglomerate in Oman They are trying to decide on the best optimal capital structure for the fertilizer project. Assume sponsors want a minimum return of 20% Assume that from lenders point of view the minimum acceptable rate is 10% Assume that DSCR ( debt service cover ratio ) should be more than 2 Formula for DSCR (OCF)/(Interest paid in that year+ Debt Repayment in that year). Assume taxes are zero. CAPEX -25,000 OCF1 10,000 OCF 2 10,000 OCF3 10,000 OCF 4 10,000 OCF5 10,000 Questions What is the optimal capital structure Equity IRR? Debt IRR? 1. 2. 3 4. DSCR ? Sur fertilizer project is sponsored by a leading business conglomerate in Oman They are trying to decide on the best optimal capital structure for the fertilizer project. Assume sponsors want a minimum return of 20% Assume that from lenders point of view the minimum acceptable rate is 10% Assume that DSCR ( debt service cover ratio ) should be more than 2 Formula for DSCR (OCF)/(Interest paid in that year+ Debt Repayment in that year). Assume taxes are zero. CAPEX -25,000 OCF1 10,000 OCF 2 10,000 OCF3 10,000 OCF 4 10,000 OCF5 10,000 Questions What is the optimal capital structure Equity IRR? Debt IRR? 1. 2. 3 4. DSCR ?

Answer rating: 100% (QA)

Ans 1 Optimum Capital Structure can be defined as proportion of debt Equity which results in a lower ... View the full answer