EFB210 - Holmes Alternative Investments - Capital Budgeting Report and Analysis - Financing Assignment

Internal Code: MAS5381

Financing Assignment:

Holmes Alternative Investments (HAI) is a boutique fund manager that invests in ‘environmentally- friendly/green’ projects. Based in Brisbane with approximately $1.2 billion of managed investments, its main clientele is other fund managers seeking exposure to green investments as either an investment strategy or to meet the green investment mandates of their investors. Recently, the investment team, under the leadership of Dr Watson, has been considering a new wind turbine project to be owned and operated by HAI. The project consists of five 1.7 megawatts (MW)  130 metre (m) high wind turbines to be installed around the Port of Brisbane. The impact of the turbines should be minimal given the selected location, the fact that no neighbouring allotments are within 1,500m of the proposed turbines and there are no nearby radio and television broadcasting antennae. However, approval will be required from Civil Aviation Safety Authority (CASA) due to its proximity to the Brisbane airport (height of turbines and possible radar disturbance). The project is unlikely to be economically viable given the current market price of electricity and the fact that Brisbane is not one of the windiest areas in Australia. In light of this, the investment team will propose to the Port of Brisbane that they subsidise the project given its environmental benefits. The proposal will contain a variety of sections, including an environmental assessment and analysis of required regulatory approvals, Questions:  Provide a detailed financial analysis of the wind turbines and an accompanying report that explains and justifies methodology, summarises findings and recommends an appropriate subsidy for Port of Brisbane to contribute, and highlights limitations with the analysis and recommendations. To complete this task, your manager has requested the following:

1. The financial analysis is to be completed in Excel. The file is to be easily adjustable for different scenarios and all inputs must be in the one sheet called  Assumptions’.
2. Understanding of financial analytical tools as the investment team will provide the report to the Port of Brisbane.