Government grants in project planning


Joined
Apr 14, 2012
Messages
1
Reaction score
0
Hi i'm an engineering student and i'm supposed to assess multiple projects and pick the best one. And my issue is on how to consider government grants in the Internal Return Rate calculations.
I'm sorry if this is not the ideal forum for the topic but i figured accounting experts should have the neccessary experience and knowledge to tackle the problem.

There is project A and Project B

Project A

life - 12 years
initial costs - 2.5m
maintenance costs - 500000$
annual revenue - 700000$
grants -
1 million at the start
2 million at the end of year 5
1 million at the end of year 10

Project A

life - 10 years
initial costs - 1.8m
maintenance costs - 400000$
annual revenue - 700000$
grants -
2 million at the start
2 million at the end of year 5

now how should i consider these grants in my calculations. No rules or obligations are mentioned about the grants. So we can make certain assumptions about the grant.

basically my question is..

can these grants be directly credited to shareholders as dividends? or do they HAVE to be spent? what is the general practice of governments or such institutions in a scenario like this?

if its not spent at the end of projects life then can it be given to shareholders as dividends? or does it have to be returned to the treasury?
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top