Simple Prediction Formula for Proportion Installment Interest Rate in a Private Finance Initiative Project

Takanori Inoue, Isamu Yoshitake

Department of Civil and Environmental Engineering, Yamaguchi University, Ube, Japan.
Sanyo Consultant Co., Ltd., Ube, Japan.

DOI: 10.4236/jssm.2013.63022                

Abstract

Private Finance Initiative (PFI) projects aim to develop public facilities using private funds. Installment interest payments must be predominant in PFI project costs. The proportion of installment interest depends upon the business period, payment method, interest rate, and other factors. However, prediction of the installment interest is not simple. Cost simulation based on various assumptions has been required for planning PFI finance project. A simplified estimation formula for installment interest rate based on cost evaluations using wide range of comparable conditions is proposed in this paper. The applicability of the proposed formula is also discussed and verified. The proportion of installment interest of a PFI project can be estimated to sufficient accuracy using the proposed formula.

Keywords

Private Finance Initiative (PFI); Installment Interest Rate; Payment; Cost Simulation

Conflicts of Interest

The authors declare no conflicts of interest.

References

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