ABSTRACT
The largest part of the cash outflows for a solar rooftop project are related to servicing term loan followed by income taxes and O&M. Incentives provided by the states and Central Government like capital subsidies, indirect tax exemptions, etc. provide direct cash flow to the project. Net cash flows can be computed for the project and for equity as well. The difference between net cash flows for project and equity is, for equity cash flows towards servicing debt is considered and for project the same is considered. Net Present Value (NPV): NPV indicates the returns on the project after discounting the annual cash flows. NPV is calculated as difference between the project cost and present value of the annual cash flows throughout project life. The weighted average of required post-tax return on equity and interest rate is used for discounting the annual cash flows to calculate the present value of cash flows.
