Lecture 7

Lenders prefer

• Higher equity from investors

• Lower equity from investors

To maximize NPV and IRR, should investors push for higher or lower bank loans?

• Higher

• Lower

Investors prefer

• More total cash

• Higher NPV

• They are the same

Models used by lenders are ... than models used by investors

• Pessimistic

• Optimistic

If Debt Service Coverage Ratio is higher,

• Project company end up paying less total interest

• Project company end up paying higher total interest