Low-cost Capital

There are three general ways of calculating the cost of
your capital outlay:

  1. The Opportunity Cost of Capital
    This method represents capital that could have been invested in your most lucrative business opportunities (15% to 19%)
  2. The Weighted After-Tax Cost of Capital
    This method takes into account a combination of your equity and debt cost (10% to 12%)
  3. The Debt-Only, After-Tax Cost of Capital
    This method assumes that the entire project will be funded with debt (3% to 5%)

 Most corporate finance officers would agree that the true cost of a plant's capital is best reflected by the second method -- weighted after-tax cost -- and this is the approach that Peregrine Energy feels is most appropriate and accurate.  However, Peregrine Energy's pricing structure strives to be competitive with debt-only cost even if weighted cost of capital is substantially higher. By reducing the middleman profits associated with a typical design/build construction project and by using a higher leverage structure, Peregrine Energy can price its capital in the same range as debt-only funding.