| Course | IBF-5070 Financial Modeling |
|---|---|
| Module | Module 2 |
| Paper type | Module 2 written assignment: alternative financial models and necessary assumptions |
| Length | About 615 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | MBA in Finance |
| Updated | October 2026 |
Free sample paper for IBF 5070 Module 2
Three Models for Three Decisions: Corporate, Project and Acquisition Models at Bayshore Renewables
Student Name
MBA in Finance, Thomas Edison State University
IBF-5070: Financial Modeling
Mentor Name
Month Day, Year
Three Models for Three Decisions: Corporate, Project and Acquisition Models at Bayshore Renewables
Introduction
Bayshore Renewables faces three decisions this year. Its lenders want a five-year corporate plan. Its board must decide on the Cumberland project. And a developer has offered to sell Bayshore a 40 MW operating solar farm in Salem County. Each decision calls for a different kind of model, and Bodmer (2015) stresses that choosing the wrong structure produces answers to the wrong question. The paper treats each model in turn and then asks which assumptions matter most to each.
Comparing the Models
A corporate model forecasts the company as a whole and usually ends with a terminal value, because the company is expected to continue. A project finance model follows one asset from construction to retirement, with no terminal value, and allocates cash through a waterfall that pays lenders before owners. Esty (2004) describes project finance as the use of a legally independent project company financed with non-recourse debt, which is why lenders focus on the project's own cash flow and coverage. An acquisition model works backward from a required return to the most a buyer should pay.
| Feature | Corporate model | Project finance model | Acquisition model |
|---|---|---|---|
| Entity | The whole company | One project in its own company | A target asset or business |
| Life | Going concern, with a terminal value | Finite, about 35 years for solar | Holding period, often with an exit value |
| Main output | Earnings, cash flow, credit ratios | NPV, IRR, debt service coverage | Price that can be paid for a target return |
| Debt | Corporate borrowing against the company | Non-recourse debt sized on project cash flow | Acquisition debt, often refinanced |
| Cash allocation | Dividends and reinvestment | Waterfall: costs, debt service, reserves, then equity | Debt paydown, then distributions |
Assumptions Each Model Needs
The table shows that the models share many inputs but depend on them differently. The terminal value can account for half or more of a corporate model's value, so its growth rate deserves the most scrutiny. In the project model, generation and the contract price dominate, and an independent engineer's estimate of expected output, called the P50, and of output that will be exceeded nine years in ten, the P90, drives both value and debt size.
| Assumption | Corporate | Project | Acquisition | Typical source |
|---|---|---|---|---|
| Generation, P50 and P90 | Fleet total | Critical | Critical, from operating history | Independent engineer |
| Power price | Blended across contracts | Contract price, then market | Remaining contract, then market | Contract; market forecast |
| Construction cost | For new projects only | Critical | Not needed | Contractor bids |
| Operating costs | Fleet and overhead | Project only | Project, after transition | Service contracts |
| Terminal or exit value | Critical | None | Critical | Multiples or perpetuity growth |
| Tax credits | Company tax position | Investment tax credit | Remaining depreciation | Tax counsel |
How Reliable Are the Assumptions?
Contract terms, such as the 20-year power purchase price of $70 per MWh, are known with near certainty. Generation estimates rest on decades of weather data but still vary from year to year. Market power prices after the contract ends are the least reliable input, because they depend on fuel prices, demand and policy two decades away. Kahneman and Lovallo (1993) found that planners tend to make bold forecasts by focusing on the case at hand rather than on the record of similar projects, so Bayshore should compare its generation and cost estimates with the outcomes of comparable solar farms.
Conclusion
Bayshore needs a corporate model for its lenders, a project finance model for Cumberland and an acquisition model for the Salem County offer. Each requires the assumptions its decision depends on, from a terminal value to P50 generation, and the least certain of them, such as market prices after the contract, should be tested most heavily in later modules.
References
Bodmer, E. (2015). Corporate and project finance modeling: Theory and practice. Wiley.
Esty, B. C. (2004). Why study large projects? An introduction to research on project finance. European Financial Management, 10(2), 213-224. https://doi.org/10.1111/j.1354-7798.2004.00247.x
Kahneman, D., & Lovallo, D. (1993). Timid choices and bold forecasts: A cognitive perspective on risk taking. Management Science, 39(1), 17-31. https://doi.org/10.1287/mnsc.39.1.17
What the IBF 5070 Module 2 instructions ask for
The second IBF-5070 written assignment asks you to compare alternative financial models and the assumptions they require. Expect to contrast corporate, project finance and acquisition or merger models by purpose, life, valuation and financing, and to discuss how assumptions are developed and tested. Use a case where more than one type of model would be needed, which makes the comparison practical. Present differences in a table, then explain the ones that matter most. Name the source of each key assumption and say how reliable it is, since the course returns to this in later modules on risk. An acquisition or merger model is a common third choice, but a buyout funded mostly with debt or a real estate model also works if it fits your case. Whatever you choose, show where the models differ in purpose and in the inputs they cannot do without.
Inside the IBF 5070 Module 2 example
The paper introduces three decisions facing one company, so each model type has a purpose. A comparison table contrasts entity, life, outputs, debt and cash allocation, and the text explains the most important differences with research on project finance. An assumptions table shows which inputs each model needs and where they come from. A reliability section ranks the inputs from contract terms to long-run market prices and uses research on forecasting bias to recommend comparing estimates with similar projects. The conclusion links each model to its decision. Both tables are followed by text that explains the most important rows, so the reader is told what to notice rather than left to compare cells alone. The case stays the same as in Module 1, which keeps the course's running example intact.
Where the marks sit in the IBF 5070 Module 2 rubric
Mentors grade this assignment on an accurate comparison of model types, sound analysis of assumptions and their sources, and clear writing. Answers that tie each model to a decision, and that explain why terminal value matters in one model and not another, show depth. Distinguishing reliable from uncertain assumptions prepares for the risk modules and demonstrates judgment. Research on project finance or forecasting adds support beyond the textbook, and tables that compare models side by side make the analysis easy to follow. Mentors also value papers that note where the same input, such as generation or price, plays a larger role in one model than another, since that shows how purpose shapes emphasis. Accurate definitions of P50, P90, non-recourse debt and terminal value matter.
IBF 5070 Module 2 help from the desk
Students lose points by describing model types in general terms without a case, by listing assumptions without sources or by treating all assumptions as equally reliable. Others confuse project finance with any project evaluation. Explain what makes project finance distinct: a separate company, non-recourse debt and a cash waterfall. Give each key assumption a source and rate its reliability. Show where the models share inputs and where they diverge. Keep your case consistent with the model you described in Module 1. Keep the comparison balanced: no model type is better in general, only better suited to a decision. A free first sample on your own IBF-5070 Module 2 question is available on request.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Thomas Edison State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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IBF 5070 Module 2 questions, answered
Where can I find a free IBF 5070 Module 2 sample paper?
Corporate, project finance and acquisition models are compared above for one power company, with assumption tables.
How does a project finance model differ from a corporate model?
It follows one asset over a finite life with no terminal value, uses non-recourse debt and allocates cash through a waterfall.
What is P50 generation?
The expected annual output of a power project, with a 50 percent chance of being exceeded; P90 is exceeded nine years in ten.
Why does terminal value matter in a corporate model?
Because the company continues beyond the forecast, and the terminal value often makes up a large share of total value.
Which assumptions are least reliable in a solar project model?
Market power prices after the contract ends, which depend on fuel, demand and policy far in the future.