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S/F/274. Evaluation of financing the Mozal project and investment opportunity: case study Alusaf

WORDS:
2650
DATE:
2010
PRICE:
29.99 GBP

This paper analyses the financing of the Mozal Project in Mozambique, focusing on the investment from Alusaf, part of the Gencor group. The paper begins by evaluating the investment opportunity for Alusaf, by calculating the rate of return. The discount rate is analysed using the capital asset pricing model (CAPM), The Hamada formula and by identifying the cost of equity. Following this is an evaluation of the sovereign risk adjustment and cash flows and discounting. All of these are summarised to provide an investment recommendation for the company. The paper discusses the risks involved in the Mozal Project as sovereign, construction and operational risks. A summary is provided regarding the benefits of investment in the project.

 

KEYWORDS: Mozal Project, financing, investment, Alusaf, Gencor group, rate of return, discount rate, capital asset pricing model, CAPM, Hamada formula, cost of equity, sovereign risk, cash flows, discounting, construction,