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If you have a fully written if asset that is still producing amazing returns, that may be better cash flow wise than taking on a new loan.
by konschubert 3y ago
If you have a fully written if asset that is still producing amazing returns, that may be better cash flow wise than taking on a new loan.
- hef19898 3y agoIn theory, but not all written off, old assets are a good idea. Especially if the new one generates a lot more revenue than the old one. Just one thing, depreciation is all about cost accounting and has exactly zero to do with cash flow.
- konschubert 3y agoMy point is, if the discounted cash flow from (new panels - loan repayment)is smaller than the discounted cash flow of keeping the old panels, over a sufficiently large future period, then it’s better to keep the old panels.
- hef19898 3y agoThose plant, utility scale I mean, are not paying loans, those are using special project investment vehicles. Discounted cashflow is not used in these cases (I know it as a way to determine the valuation of a company), things like ROI are used for utility scale projects. And guess why the vast majority is repowered with new panels...
- konschubert 3y agoI feel like the of action that makes the most economic sense should be invariant of the exact financing vehicle. (Loan or investment fund).
- hef19898 3y agoFeelings are completely irrelevant when it comes to investments in the tens to hundreds of millions. Those things are extremely well defined and unserstood, that's why people in accounting, finance and business development are crucial and have rather high paying jobs. The back of napkin maths I do for household level purchases and investments do not scale to those levels. Nor do they to company level finances. Following those practices are, obviously, no guarantee for success. Not following them on the other hand is a near guarantee for failure.