The Project, Equity and Payout IRRs are calculated using following function, with the only difference being that the Reference is adjusted for the different IRR levels. Also, it is important to note that the calculations are based on monthly cashflows as opposed to quarterly or yearly.
The Equity and Payout cashflows used as reference can be easily derived from the Fimo. They each have a different line indicating the respective cashflows. The project IRR is based on adjusted free cashflows, which is calculated by subtracting the tax shield from the free cashflow. which is also an individual line in the Fimo. The Tax Shield itself is calculated as follows:
- The tax payments are calculated on EBIT. This by multiplying the tax rate times EBIT and adding the reduction in taxes paid due to Deferred Tax Assets
- The tax payments are calculated on EBT by multiplying the tax rates by EBT and adding the reduction in taxes paid due to Deferred Tax Assets
- The taxes paid on EBT (see 2) are subtracted from the taxes paid on EBIT (see 1). The resulting value is the tax shield for the respective month.
Name | Description |
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Project Return | IRR | The Project Return IRR equals the annualized Project Return in percentage on basis of the tax-shield adjusted Free Cashflow. The tax adjustment concerns the tax saving because of interest according to the Profit & Loss statement. Thus the Project Return IRR equals the Equity IRR with a Debt leverage of 0% ("full equity"). |
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Break Even | The key figure Project Return Break Even shows in number of years and as date, after how many years respective in which month the break even point is reached. At this point the costs of the project equals the earnings. |
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Payback | The key figure Project Return Payback shows the rate between the expected cash returns of the project and the Capex cost of the project in percentage. |
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Reference | Free Cashflow adjusted (The adjusted Free Cashflow is after Debt Interest discounts. This guarantees that the Project Return is independent of the financial structure). |
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Equity Return | IRR | The Equity Return IRR equals the annualized Equity Return in percentage on basis of the Cash Flow to Equity. |
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Break Even | The key figure Equity Return Break Even shows in number of years and as date, after how many years respective in which month the break even point is reached. At this point the Equity payments equals the Cashflow to Equity. |
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Payback | The key figure Equity Return Payback shows the rate between the sum of all Payouts to Equity-investors and the sum of all Equity payments from a project company view. |
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Reference | Cashflow to Equity |
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Payout Return | IRR | The Payout Return IRR equals the annualized Payout return in percentage on basis of the Payout. |
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Break Even | The key figure Payout Return Break Even shows in number of years and as date, after how many years respective in which month the break even point is reached. At this point the Equity payments equals the Payouts. |
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Payback | The key figure Payout Return Payback shows the rate between the expected Payouts and the sum of all Equity payments from a project company view in percentage. |
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Reference | Payout |
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