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.
Cite this paper
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