This case provides students with financial decisions in state-owned enterprises and the concept of the financial and economic rate of return. It is based on real-life projects of electrification, ongoing Indian Railways, one of the largest government organizations in the world. Electrification projects require large capital investments with significant financial and welfare implications. The case analysis includes (i) estimates of additional cash flows under alternative scenarios, (II) the calculation of the financial rate of return, and (III) a sensitivity analysis to identify the key value drivers. It also provides an opportunity to discuss nominal and real cash flow, the difference between the internal rate of return and net present value, and the choice of a variety of discounts. The fact is suitable for a course in corporate finance and valuation. "Hide
by Ravi Anshuman, Narang Tapsi, Anand Sharma Source: Indian Institute of Management, Bangalore 14 pages. Publication Date: November 1, 2012. Prod. #: IMB395-PDF-ENG
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