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Case
-
Reference no. 296-022-1
Compact case
Published by:
IMD (1991)
Version:
06.05.1991
Length:
5 pages
Data source:
Field research

Abstract

Kalaeloa Partners, a 3-member partnership formed to build, own and operate an electrical power generation plant in Hawaii, is faced with a major decision: (a) finance the project through ABB''s internal debt capacity or, (b) finance the project with a non-recourse loan offered by a large commercial bank. The decision is of some importance as it will affect the rate of return on the project for ABB (one of the Kalaeloa partners) and, if too expensive, would push Kalaeloa Partners'' costs above the "avoided cost" calculated by the local public utility company, who would be purchasing the plant''s production. This Basic Project finance case is well suited for an introductory finance course (MBA).

Topics

Project financing; Power plant
Industry:
Size:
USD20 billion
Other setting(s):
1990

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