Project Finance – Key Abbreviations (PART 2)
Here we have a selection of fundamental Abbreviations & Terms that are used in Project Finance on a regular basis.
11. DCF:
DISCOUNTED CASH FLOW: is a financial valuation method used to estimate the value of an investment based on its expected future cash flows, which are then discounted to their present value.
12. IRR:
INTERNAL RATE OF RETURN: is a financial metric used to measure the profitability of an investment by calculating the rate of return that would make the net present value of its cash flows equal to zero.
13. NPV:
NET PRESENT VALUE: is a financial metric used to calculate the present value of an investment’s expected cash inflows and outflows, taking into account the time value of money.
14. LBO:
LEVERAGED BUYOUT: is a financial strategy where a company is acquired using a significant amount of debt financing, with the aim of using the acquired company’s cash flows to repay the debt over time.
15. ROI:
RETURN ON INVESTMENT: is a financial metric used to measure the profitability of an investment, calculated as the ratio of the investment’s net profit to its cost.
16. WACC:
WEIGHTED AVERAGE COST OF CAPITAL: is a calculation of the cost of a company’s capital, taking into account the relative weight of each source of capital (debt and equity) and the cost of each source. It is used to evaluate the potential return of new investments and to determine the minimum required return a company needs to earn to create value for its shareholders.
See PART 1 here:
https://itoma.co.uk/2023/project-finance-key-abbreviations-part-1/
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