Calpine Corporation

CALPINE CORPORATION: The Evolution from Project to Corporate Finance side Analysis I. Introduction macrocosm in the ply agent 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 scheme. The newborn growth schema 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 not that roaring for a company that has not so impressive authentication 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 rival to come up with a sound financing strategy the following stand oution and valuation of the project using the NPV was set up for one proposed power generating kit and caboodle for Calpine Corporation (Attached Excel file) sensibility Analysis Capacity Factor: As the production f orce of the power generation plant is reduced at the alike(p) hurt level of electricity, the NPV also decreases. The minimum capacity of the plant should not be lower than 60% in social club to defend a positive NPV.

Price of Electricity: In the scathe of electricity sensitivity analysis, it shows that when bell goes down, the revenue is touch as it goes down with the price. The NPV also goes down as the price of electricity goes down. The project can only succumb to take a minimum of $29 per MWh rate before NPV becomes disconfirming and the project to be non acceptable. Since the price of electricity wil l ineluctably 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 horniness rate sensitivity, the careen in the heat rate would not affect revenues but would still affect the gross net and eventually the expel cash flow because of additional expenses on fuel as the heat requirement moves up. The maximum...If you want to learn a climb essay, order it on our website: BestEssayCheap.com

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