FIN3CSF: CS Energy Nuclear Power Station Project Evaluation Case Study

This report analyzes the feasibility of CS Energy's nuclear power plant project, evaluating its financial viability using techniques such as Net Present Value (NPV), Payback Period, Discounted Payback Period, and Internal Rate of Return (IRR). The analysis includes a spreadsheet model assessing cash flows, construction costs, and operational expenses. Quantitative and qualitative risks are identified, with scenario analyses considering best-case and worst-case scenarios. Recommendations are provided for project modeling and a business proposal is presented to the government, emphasizing the project's benefits and safety measures. The report concludes by reiterating the project's potential for the welfare of the people and the need for government approval, despite the current ban on nuclear power generation in Australia. The analysis also references the project's joint venture with Alinta Energy Limited for electricity supply in Queensland.

Running head: CASE STUDIES IN FINANCE
Case Studies in Finance
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CASE STUDIES IN FINANCE
Table of Contents
Introduction................................................................................................................................2
Spreadsheet Model of CS Energy..............................................................................................2
Quantitative and Qualitative Risk..............................................................................................2
Recommendation and Project Modelling...................................................................................4
Proposal of the Business............................................................................................................4
Conclusion..................................................................................................................................5
Reference list..............................................................................................................................6

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CASE STUDIES IN FINANCE
Introduction
The report has been prepared to analyze the feasibility of the nuclear power plant. The
cash flows have been determined and their Net Present Value has been calculated. Payback
Period, Discounted Payback Period, Internal Rate of Return and Net Present Value are the
techniques that have utilized to determine the approval of the project.
Spreadsheet Model of CS Energy
The construction phase of the project has been determined for 5 years with minimum
amount being spent. It has been developed to provide better electricity capacity to the public
of Queensland. The necessary cost allocations have been done (Ikonen and Tulkki 2014).
There has been use of non-renewable and natural resources. There is involvement of foreign
issues due to the parent company being in Hong Kong.
Quantitative and Qualitative Risk
The projection duration has been determined to be 9.5 years, post which it will help to
earn the benefits. Both the equity and debt have been used in the source of the finance to
minimize and reduce its risk.
The operating efficiency rate of 93%, real tariff rate at $85, average O & M cost at
40% and inflation rate at 2.3% has been considered as the most feasible.

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CASE STUDIES IN FINANCE
Scenario analysis have been done considering two situations, one being the best case
and the other being the worst case for the project.
The health and safety of the workers as well as the consumers have been highlighted
and appropriate measures been taken to curb the issues. The harmful radiations and injury
have been measured to determine its risk and effect on the employees. The situations that
could lead to accidents have been carefully analyzed for proper implementation of measures.
Recommendation and Project Modelling
The project modelling has been performed by representing the cash flows in a
comprehensive manner. The changes have to be regularly updated. It is a large project
proposal put forward by the company after its joint venture agreement with Alianta Energy
Limited. The variables in input that have affected the project more are considered more
sensitive to the project. The company has been recommended to start the construction of the
power plant so that the country can get the benefits and the resources can be efficiently and
effectively used. The approval from the Government is required to use the resources and start
construction.

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CASE STUDIES IN FINANCE
Proposal of the Business to the Government
To
The Australian Federal Government
Sub: Approval for the power plant
Respected Sir
This letter is to request you as a business proposal for approval for the nuclear power
plant. The main details and specifications have been emphasized and highlighted to catch the
attention of the Government. It has focused on the ethical issues along with the benefits and
hazards of the project. The appropriate measures have been taken to ensure safety and
prevent loss. Therefore, the project could be started upon receiving approval.
Thanking You
CS Energy
Conclusion
It is an initiative taken by CS Energy for the welfare of the people of its country. The
quantitative as well as qualitative risks have been identified. The construction phase has been
allocated minimum cost. The life of the power plant has been forecasted to be 60 years. The
Government is expected to give approval for the project even though nuclear power
generation has been banned in Australia.

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CASE STUDIES IN FINANCE
Reference list
Ikonen, T. and Tulkki, V., 2014. The importance of input interactions in the uncertainty and
sensitivity analysis of nuclear fuel behavior. Nuclear Engineering and Design, 275, pp.229-
241.