featured-feasibility-1200x630 | eFinancialModels

A feasibility study exists to answer two questions, and most templates answer only the first. Is the project worth doing, and can it be financed?

This Excel model answers both. It sizes the capital cost and the funding need, builds a debt schedule from that need, reports the cover ratio in every operating year against the covenant a lender would set, and computes the return to the project and to the equity separately. It is industry-agnostic: a plant, a hotel, a fleet, a processing line — anything with a construction period followed by an operating life.

The circular reference every project model has

The interest that accrues while a project is being built has to be funded. Funding it enlarges the amount to be raised; a larger raise means a larger debt; a larger debt accrues more interest. Most feasibility templates deal with this by pretending it does not exist — they size the debt on the capex alone and add the construction interest afterwards, which understates the funding need and overstates the equity return. In the worked example the difference is $1.56m on a $43m project.

This model puts the loop on the page. Twelve columns run left to right: column zero assumes no fee and no interest, and each column afterwards recomputes the facility, the fee and the construction interest from the need the column before it produced. The residual row falls from $1.6m to zero and an integrity check confirms it got there. Excel’s iterative calculation setting is never touched.

The question a lender asks

An investor asks whether the return beats the cost of capital. A lender asks something narrower: does the cash arrive in time to service the loan in the year it is thinnest. A project can clear its hurdle rate comfortably and still be unfundable.

The Debt Schedule tab reports the DSCR every operating year, tests it against your covenant and gives a verdict. It also reports the debt a lender would have sized on this cash flow — the annuity the weakest year supports at your target ratio, discounted over the tenor. In the worked example that is $21.5m against a facility of $20.1m: the gearing survives, with $1.5m to spare and no more. The binding year is the first year of operations, at 1.45x, against about 2.95x for the rest of the loan’s life.

Two tax lines

Interest is deductible, so a geared project pays less tax than an ungeared one — but that saving belongs to the financing, not to the project. The model computes tax twice, charges the unlevered figure to the project cash flow and the levered one to the equity, and an integrity check proves the two cash flows differ by exactly the drawdowns, the debt service and the shield.

What is inside

Ten tabs, twelve years (two of construction, ten of operations), three scenarios from one cell.
1,419 live formulas. No macros, no add-ins, no external links, no password protection, no locked cells.
Three sensitivity ladders — price, capital cost, operating cost — each re-deriving the whole cash flow from scratch. In the worked example a 10% fall in price takes the return below the WACC, and so does a 20% rise in operating cost.
NPV, IRR, MIRR, payback, discounted payback and profitability index for the project; NPV, IRR, payback and money multiple for the equity.
A five-page PDF guide — free to download here — documenting every convention and every limitation.
Seventeen integrity checks, all of which must read PASS.

This workbook models the arithmetic of your own project. It is not investment advice, and the worked example is invented.

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