Texas Case Slides

General Information NPV Economics Merits Cost of Money WACC Equity and Free Cash flow Numbers and Calculation IRR & WACC Conclusions References

Agenda

Texas High-Speed Rail Corporation

General Information (1/2)

Easter leg triangle Texas TGV Consortium

Dallas

2 Mio Dallas – Houston 2 Mio San Antonio- Austin - Dallas 4 Mio Dallas Inter. Airports

Private Investors 200 miles/h

Houston

Competitive prices with airfares

San Antonio

Texas High-Speed Rail Corporation

General Information (2/2)

1991

1993

1995

1998

2002

Mannai

Corbett and Barnes

MK

SNCF French Texas HSR National rail Co. Authority

Users

Workers

Others

Texas High-Speed Rail Corporation

NPV

Based on Economic Merits (1/3)

Target market & Predicted revenues

14 Mio of potential customers (2001)

3-4% Growth each year

38% Interconnect Traffic

35% Local Traffic

27% Other Traffic

Additional Revenues from:

Parking, package delivery, advertising Seats reservation, optional business- and first-class service, at-seat meals Telecommunication companies Induced commuters’ trips Rent of spaces

Texas High-Speed Rail Corporation

NPV

Based on Economic Merits (2/3)

Investment needed: $ 7.35 Billion

Preliminary phase

Preliminary operating, engineering, constructing, environment and financial studies Preconstructing engineering, feasibility study, permissons’ obtaining

$ 0.04 Bi $ 0.51 Bi

Development phase

Construction phase Start-up phase Stable Operations

Infrastructure, public facilities Rolling stock procurement Advertisement Maintanance

$ 5.7 Bi $ 1.1 Bi

Texas High-Speed Rail Corporation

NPV

Based on Economic Merits (3/3)

Advantages

Challenges

The cost of money

For a firm – “Cost of Capital”

COST Expected return %

‘Leverage’ a company

owners or investors put money in the company the company borrows money from the bank

EQUITY

Interest DEBT

Texas High-Speed Rail...