Financing

Most feasibility studies involve debt and equity. In the section on Economics it was assumed that there was a debt and interest to be paid. The amount of debt, or debt to equity ratio, varies widely from company to company. Some companies assume 100% equity and require the project to meet their set criteria on the entire investment. In this case all borrowings are considered to be at the corporate level, which then provides 100% of the funds to each project. In other companies, particularly utilities, the debt at the project level can be as high as 75% or more. 

Some energy and other projects that obtain government loan guarantees could truly treat the equity as their total investment in the project. 

Banks are not in business to take risks. They rent money and do everything they can to insure the return of their principal as well as the interest. Elaborate rating systems have been developed to measure each company s ability to repay its loans. One criterion is the debt to equity ratio. The higher the debt the more risk in a loan, and the higher the interest rate. 

Some projects obtain project financing. That is, the parent company does not become liable for the loan. Some have been based on back to back contracts for construction, raw materials, and sales. These usually have the 

Additional reading on project financing can be found in Reference 1. 

The SCHC was financed largely from membership dues and apparently only a little from donations for instance the Spolek pro prumysl cukrovarnicky v Cechdch (Association for Sugar Industry in Bohemia) and K. Preis regularly subsidized the society s organ Listy Chemicke (Chemical Letters), while the state did not provide any assistance. Nevertheless, after some initial monetary difficulties, in the 1890s the economic situation of the SCHC improved, and it did not report financial problems, especially thanks to a substantial rise of the membership, which reached its peak - 448 members in 1896 then it could even afford a paid administrative secretary. 

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The national organizations are often relayed into each profession by a body created and financed by this profession and which undertakes all or part of the work in preparing the standards. In the petroleum industry, this role is carried out in France by the BNPet (Bureau de Normalisation du Petrole) and in Germany by the FAM (Fachausschuss Mineralol-und Brennstoffnormung), in the United Kingdom by the IP (Institute of Petroleum), and in the USA by the ASTM (American Society for Testing and Materials). In the first two cases, the standards are published only by the national organizations (AFNOR and DIN respectively), while the IP and the ASTM also publish their own documents, only some of which are adopted by the BSI and ANSI, respectively. 

The environmental performance of companies within the industry is normally subject to the legislative requirements of the host government, but is increasingly becoming scrutinised by the public, as available information and general levels of awareness increase. Major companies see responsible management of the environmental aspects of their operations as crucial to the future of their business. The approval of loans from major banks for project finance is usually conditional on acceptable environmental management. 

As discussed in Sections 13.0 and 14.0, the management of operating expenditure (opex) is a major issue, since initial estimates of opex are often far exceeded in reality, and may threaten the profitability of a project. Within the FDP, it is therefore useful to specify the system which will be used to measure the opex. Without measuring opex, there is no chance of managing it. This will involve the joint effort of production operations, finance and accounting, and the development managers. 

If the company is fully self-financing for its new ventures, then the appropriate discount rate would be the rate of return of the alternative investment opportunities (e.g. other projects) since this opportunity is foregone by undertaking the proposed project. This represents the opportunity cost of the capital. It is assumed that the return from the alternative projects is at least equal to the cost of capital to the company (otherwise the alternative projects should not be undertaken). 

Massive studies of the health problems associated with fats have included the Anti-Coronary Club study in New York City (2), the Framingham study (3) in Massachusetts, and the Chicago study (4). These studies were financed by the United States federal government and supported by the Surgeon General s office, which issued a statement recommending that the fat component of the diet be reduced from an estimated 40% of calories to 30% (5). 

Second, development efforts ia direct reduction and direct smelting processes have also iacreased. Whereas these developmeats require significant commitment of finances and labor to achieve commercialization, the rewards promised by avoiding cokemaking and hy utilizing smaller scale units which have relatively low capital costs make the commitment worthwhile. 

Maintenance departments provide support to other functions of manufactuting management. Some of the corporate staff activities that are of concern to the plant maintenance organisation are iadustrial relations, finance, material control, services, and manufactuting engineering. 

Finance. Cost accounting, budget control, payroU, records, accounts payable, accounts receivable, capital equipment control, taxes, customs, iasurance, loss control, and management information are all part of the finance function. 

The key to this microutility market segment, therefore, is financial in addition to technological. It is likely that any significant success in this market will result directiy from the creation of a suitable financing strategy. 

QuaHtative arguments deal primarily with the sense of ownership and security which result from individually owned generation systems. Additional complexity will arise from the aesthetic criteria specific to both individual homes and the surrounding community. Of course, the autonomy inherent in distributed rooftop arrays probably constitutes an institutional barrier to their acceptance by some utiHty companies, unless they are involved in the financing and/or marketing chain. 

R. E. Maples and M. J. Hyland, "What Is Involved in Major Venture Financing" Cbem. Eng. Progr. (fan. 1980). 

The total U.S. market grew from about 332 million in 1991 to 372 million in 1992 to 406 million in 1993. Uncertainties in health care financing and restmcturing in 1994 may have led to stabilization or a slight decline. 

Within the larger system, research and especially development processes have become business processes, with teams from marketing, manufacturing, and finance participating from the start (8). In some companies, the R D function is so highly integrated with the business that formal R D organizations have vanished many corporate laboratories have been reduced or disbanded, with the researchers moved into separate business divisions (9,10). 

Economic Report, Ministiy of Finance, Kuala Lampur, Malaysia, 1994/95. 

Car manufacturers and intermediaries offer various forms of rail-car leases, ranging from short-term, full-maintenance rentals to long-term leases requiring outside financing (3). Many chemical shippers have substantial investments or lease commitments in tank cars and similar rail equipment, including cars constmcted of or lined with special materials for particular products. Other cars may be thermally insulated to prevent excessive heat buildup in transit or for protection against fire. 

J. Couper and W. Rader, Applied Finance and Economic Analysis for S dentists and Engineers, Van Nostrand Reinhold, New York, 1986. 

A means oF building up a fund to finance plant replacement... 

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