Financing

 

Inputs for the financing costs of the pipeline transport system for all plant types are entered on the Financing parameter screen. The following parameters are available:

•Year Costs Reported: This is the year in which all costs are given or displayed, both in the input screens and the results. A cost index is used by the IECM to scale all costs to the cost year specified by this parameter. This value is read-only and is shown strictly for reference. It is set on the Overall Plant Financing & Cost Year screen. 

•Discount Rate (Before Taxes): This is also known as the cost of money. Discount rate (before taxes) is equal to the sum or return on debt plus return on equity, and is the time value of money used in before-tax present worth arithmetic (i.e., levelization).

•Fixed Charge Factor (FCF): This parameter, also known as the capital recovery factor, is used to find the uniform annual amount needed to repay a loan or investment with interest. It is one of the most important parameters in the IECM. It determines the revenue required to finance the power plant based on the capital expenditures. Put another way, it is a levelized factor which accounts for the revenue per dollar of total plant cost that must be collected from customers in order to pay the carrying charges on that capital investment.

•Inflation Rate: This is the rise in price levels caused by an increase in the available currency and credit without a proportionate increase in available goods or services. It does not include real escalation.

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