Question on approach to be followed for wind asset valuation case study
So I have some renewables modeling tests coming up, which I have been practicing for. I found this old prompt from an investment banking firm which should be similar to what I actually get on the tests. For this wind asset case study, my primary question at the moment is how to calculate purchase price? Currently, I am calculating EBITDA (revenue - expenses) and then calculating the NPV of the post tax (no taxes actually since self sheltered) unlevered free cash flow (using different discount rates for merchant and contracted revenues). Is that correct?
Another approach that was suggested to me involves circularity. I could assume a purchase price and calculate the MACRS depreciation on that, incorporate the depreciation (and resulting NOLs) into my cash flow calculations and iterate (cause purchase price would be based on the resultant post tax cash flows). However, I believe the purchase price should be based on the asset itself whereas the accelerated depreciation should impact just the buyer's returns and not the purchase price itself. Any advice would be helpful
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