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Leveraged Partnership Flip
669
Where Total Installed Cost is from the System Costs page, and Debt Service Reserve and Work ing
Capital Reserve are the total reserve amounts described below.
(Increase)/Decrease in working capital reserve account
The working capital reserve amount in Year Zero depends on the Months of Operating Costs from the
Financing page and the Year One total operating expense:
Capital Reserve in Year Zero = Total Operating Expense in Year One ($) × Months of Operating
Costs (months) ÷ 12 (months)
In Year One and later:
Capital Reserve in Year n>0 = Capital Reserve in Year n-1 ($) - Total Operating Expense in Year n
($) × Months of Operating Costs (months) ÷ 12 (months)
Where Months of Operating Costs is from the Financing page.
(Increase)/Decrease in major equipment reserve accounts
For each of the up to three major equipment reserve accounts that you specify on the Financing page,
SAM calculates the annual amount required to ensure that sufficient funds are available in the
replacement year to cover the replacement cost:
For example, in the example described below under Major Equipment Capital Spending, the annual
increase in reserves is $530,682/year = $2,653,400 ÷ 5 years.
Increase in Major Equipment Reserve = Inflation Adjusted Replacement Cost in Replacement Year
($) ÷ Replacement Year (year)
The increase is shown in the cash flow as a negative value.
In the year that the replacement occurs (in this example, Year 5), the decrease in major equipment
reserve account is $2,122,727 = $2,653,400 - $430,682.
Decrease in Major Equipment Reserve in Replacement Year = Inflation Adjusted Replacement Cost
in Replacement Year - Increase in Major Equipment Reserve
The decrease is shown in the cash flow as a positive value.
Major equipment capital spending
For each of the up to three major equipment reserve accounts that you specify on the Financing page,
the inflation-adjusted amount is reported in the year that you specify.
For example, if you specify a $2,500 (in Year One dollars) replacement cost with a 5 year replacement
frequency, and an inflation rate of 1.5% on the Financing page, SAM reports a major equipment capital
spending amounts in years 5, 10, 15 etc. For Year 5, the amount would be $2,653,400 = $2,500,000 ×
(1 + 0.015)^4.
In each year that the replacement occurs:
Capital Spending = - Replacement Cost (Year One $) × (1 + Inflation Rate)^(Replacement Year - 1)
The value is negative because it represents an expense or outflow.
Total project cash flow from investing activities
The total cash flow from investing activities is the sum of purchase property cost, reserve account
deposits or withdrawals, and capital spending:
Total in Year Zero = Purchase of Property Cost + Major Equipment Reserve Account
Total in Year n>0 = Major Equipment Reserve Account + Major Equipment Capital Spending
System Advisor Model 2014.1.14