RE: RE: RE: ValuationGreenandgold
If u take all the assumptions I took for SJT u will see that my NPV is good. The overruns costs at SJT make the project not that much economic. If they get another overruns costs, the project will be not economic or almost not economic depend on the overruns costs. Without this overruns costs the NPV would have been twice. So yes overruns costs do matter, it change the economic of a project. And I know what I am speaking about coz before living from my investments I was credit analyst for big companies department in a bank in Switzerland. I had to spend my day computing if the project was economic enough to lend the money to the company.
Analyst take 12% discount rate for nicaragua project and 10% for US project (coz less risky to invest in US). To see the value of a project u have to discount the yearly cash flow (here we take EBITDA to simplify) to the 12% discount rate.
At the opposite I find out that US project seem a lot more valuable on the paper. Now we have to see if they can can make them without overruns cost. But If I am buying now RPG it is for US project not SJT.
Julien