BINUS BUSINESS SCHOOLBINUS UNIVERSITY

DAY - DATE SEMESTER: EXAM TYPE FINAL EXAM CODE - COURSE NAME FI022 - Project Financing Analysis STUDENT ID : LECTURER Bisma Dewabrata STUDENT NAME:

CLASSTIME ALLOWED 180 Minutes (maximum 180 minutes) I fully understand the Exam

BOOKS ALLOWED YES Regulations below.

NOTES ALLOWED YES STUDENT SIGNATURE :

COMPUTER LAB ALLOWED YES LAPTOP ALLOWED YESINTERNET ALLOWED YES CALCULATOR ALLOWED YES

IMPORTANT: PLEASE CHECK THE CORRESPONDING BOX to each regulation to ensure you agree.EXAM REGULATIONS:

1. Before the test begins, leave all non-test materials at the front of the room, including communication devices which should all be turned off.

2. Write your answers in correct and proper English only. 3. For an open book exam, use the original textbook only (photocopies are confiscated immediately). 4. After the test, place your answer sheet in your examination book and give these to the proctor. 5. A student may complete the exam before – but not after – the exam time ends. 6. Leaving the room before the end of the exam time is allowed only if:

a. examination has begun for at least 30 minutesb. the student has completed the test c. the student will not return to the examination room

7. A student arriving more than 30 minutes late will be allowed to sit for the examination only if no other student has completed the same examination, and no additional time will be given.

8. A student is automatically considered cheating when, during the examination time, he or she:a. has a communication device turned on (such devices are confiscated immediately) b. uses any unapproved item (i.e., references, etc) for a closed book exam c. communicates with anyone, other than the proctor or lecturer of the course

i. verbally or non-verbally ii. inside or outside the examination room

iii. for any reason d. passes any item to another student (i.e., books, paper, pens, erasers, etc)e. looks at another student’s answer(s) or work f. commits PLAGIARISM from any source

9. Any student who is caught cheating:a. is listed by name and violation on announcement boards b. is immediately removed from the examination room FINAL EXAM

10.Any student may report any proctor misconduct to the Dean of Students.

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1st offense Automatically fail the course2nd offense Fail all courses taken in the semester3rd offense Expulsion from BINUS BUSINESS SCHOOL

Project Financing FI 022

Facing with the reality of limited budget and soon increasing competition from better educated foreign work force because of ASEAN free trade agreement, Indonesian government through department of education is planning to build a hybrid private and public university.

The first hybrid public and private university will run and managed by a private sector university(s) but under cooperation with University of Indonesia (UI). So it will be marketed as a joint university. If successful, this model of Public Private Partnership is expected to solve the issue of quality and quantity of education in university level in Indonesia.

The hybrid university will be in Jakarta, using a free land provided by the government. The government has opened a bidding process to seek private sector participations. Below is some information.

Life of the partnership: 10 years Average Tuition fee / semester: Rp. 20 million Estimated number of students / semester: 500 students Average operational cost / student/ semester: Rp. 5 million

The PPP project will include building a new education center and supporting system for Rp. 100 billion. The construction period will be 2 years and the cost of Rp. 100 billion will be split evenly each year.

Depreciation method: straight line for 10 years Tax rate: 20%

During the construction period (2 years), education inflation rate is assumed to be 0%. After that, education inflation rate is expected at 2% annually (only after 1st year of operation).

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Debt financing proportion: 75% Debt term: 8 years Interest rate: Bank of Indonesia (BI) rate + 250 basis point

Debt will start to be paid in the first year of operation. Interest expense is calculated based on the debt’s beginning balance in each period, starting the 1st year of operations.

One year after the end of PPP project (at year 11), the hybrid university will be privatized. The selling price is estimated at the multiple of P/E ratio of 12.

1. Create the financial model. (50 points)

2. Calculate:a) Equity IRR (5 points)b) Project IRR (5 points)c) Average DSCR (debt service coverage ratio) (5 points)d) Minimum DSCR (5 points)

3. If the range of estimated number of students are between 400 and 600,a) What is the range of IRR? (use 100 students increment) (5 points)b) The range of project IRR? (5 points)

4. Based on your scenario analysis, what can you tell me about this project? (10 points)

5. Will you participate in this PPP project? Explain. (10 points)

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