Different ratios of debt to equity and financing terms are possible. The financial conditions assumed for calculation here are shown below:
Financing Conditions
| • Debt | : | 70 percent of cost including capitalized interest |
| • Equity | : | 30 percent of cost |
| • Repayment Period | : | Seven years, including one year grace period during which interest is capitalized |
| • Interest Rate | : | 9 percent per Annum |
| • Equity ROR | : | 15 percent |
On the equity ROR, the acceptable rate is assumed to be 15 percent considering that most of the project risks are borne by the proponent. Given an 9 percent interest rate for the debt, the WACC is as computed above, i.e., equal to 10.8 percent. The debt service schedule is shown in Table 3-16. Loan proceeds are disbursed at the beginning of the year and interest payments are due at the end of the year.
The proponent is responsible for payment of real property taxes on improvement. As an incentive to the proponent, the LGU may issue an exemption on the improvement tax for a given period of time. Responsibility ends when property ownership is transferred to the LGU. Regardless of the investment mode, the proponent pays all required business license fees.
[Access: Table 3-14: Financial Assumptions for a Government Administrative Center - PDF]
[Access: Table 3-15: Income Statement, Cashflow and Balance Sheet (Government Administrative Center, in '000 Pesos) - PDF]
Table 3-16: Debt Service Schedule
| Year | Principal repayment | Interest payment | Total debt service | Principal outstanding |
| 2013 | - | 12,591,037 | 12,591,037 | 139,900,407 |
| 2014 | 19,985,772 | 11,241,997 | 31,227,769 | 119,914,634 |
| 2015 | 19,985,772 | 9,443,277 | 29,429,050 | 99,928,862 |
| 2016 | 19,985,772 | 7,644,558 | 27,630,330 | 79,943,090 |
| 2017 | 19,985,772 | 5,845,838 | 25,831,611 | 59,957,317 |
| 2018 | 19,985,772 | 4,047,119 | 24,032,891 | 39,971,545 |
| 2019 | 19,985,772 | 2,248,399 | 22,234,172 | 19,985,772 |
| 2020 | 19,985,772 | 449,680 | 20,435,452 | - |
Table 3-17: Summary of Results of the Financial Analysis
| Concession period (years) | ||||
| 5 | 10 | 15 | 20 | |
| 1 Debt amortization 1a Repayment starts in year: 1b Number of yearly installments 1c Tenor of debt (years) | ||||
| 2 | 2 | 2 | 2 | |
| 7 | 7 | 7 | 7 | |
| 8 | 8 | 8 | 8 | |
| 2 Debt service coverage ratio 2a Minimum DSCR 2b Average DSCR | ||||
| 0.96 | 0.96 | 0.96 | 0.96 | |
| 1.16 | 1.16 | 1.16 | 1.16 | |
| 3a Project IRR (post tax) 3b Project NPV@10.8% (PhP million) 3c Equity IRR (post tax) 3d Equity NPV@15% (PhP million) |
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| 4 Debt-equity gearing | 0% | 0% | 0% | 0% |
| Loan coverage ratios | ||||
| LLCR | (0.06) | 0.02 | 0.02 | 0.02 |
| PLCR | (0.06) | 0.39 | 0.96 | 1.44 |