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The purpose of this thesis is to study some aspects of Japanese corporate finance, using the analytical tools of the Modigliani-Miller theorem. The Modigliani Miller theorem is a fundamental element in the theory of finance, and establishes the conditions under which the financial structure of the firm is irrelevant to the determination of real corporate values. In its simplest form the theorem requires the presence of perfect capital markets. In the real world,- however, in which perfect capital markets dont exist the validity of the theorem depends upon a number of additional restrictions which can be viewed as special case extensions of the general form. One set of sufficient conditions ensuring the validity of the theorem, is obtained by imposing the assumption of riskless debt. Large groups of major Japanese corporations can be characterized as operating virtually free of bankruptcy risk. The thesis attributes this to the Japanese system of values underlying economic relationships, to the system of corporate groupings (known as keiretsu), and to the strategic objectives of industrial policy which provide industry with a safety-net. It argues that the popular belief that Japanese industry is subject to excessive risk exposure because of its high degree of leverage is misleading. The belief arises from data based on accounting conventions which distort the true position of firms own wealth. The thesis undertakes an empirical study of the validity of the MM theorem. Although the focus of the analysis is on the period 1978-80, the study is run on a second and very different time period, 1970-72. The major finding for the most recent period is that debt, after adjustment for tax advantages, makes no significant contribution to the valuation of companies in keiretsu groups. Interestingly, however, in the earlier period debt is found to make a positive and significant contribution to valuation.

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The search for promising mineral deposits and their development into producing mines require the expenditure of much larger sums of money than was formerly necessary for success. Mining is recognized as a risky business, and the suppliers of venture capital must be adequately compensated for assuming this risk. With the progressive development of a prospect, the uncertainty regarding its value is reduced and capital is more readily available at lower cost. As capital requirements have increased, greater reliance has been placed upon the internal resources of established producers. Equity capital is still supplied by the public for the hazardous first stages of prospecting and exploration, but later development and production financing is likely to be obtained from operating companies or financial institutions. Government guarantees, loans, and purchase agreements have been important in the financing of several large ventures. The development of a mining property is a stochastic production function, the outcome of which is probabilistic. In order to optimize this output, no more should be spent on a property than the expected realization of its present worth. This requires the continuous assessment of the probability of various outcomes and their financial results at each stage of the decision process. The purchase of information to further reduce the uncertainty of future earnings may be necessary before making the final commitment to production. The developer must also be assured of sufficient capital to complete mine development and plant construction. / Business, Sauder School of / Graduate

The hypothesis of this study is that the optimal plant size for a mining venture is dependent upon both uncontrollable and controllable variables. Examples of variables which are uncontrollable to the firm are characteristics of the orebody, capital and product markets, projected price levels, and tax structure. Controllable variables in determining plant size are rate of recovery, level of recovery, capital costs, and operating costs. The primary purpose of this study is to delineate the effects of these variables, both singly and jointly, upon plant size and to present a model which will interrelate the variables with that scale of plant which will maximize the value of the firm. A secondary purpose of the study is to compare the impact of both Canadian and United States tax laws upon the profitability of a given operation, and upon the optimal grade-capacity combination to be employed for a given orebody. The difference of the impact of Canadian and United States tax laws with respect to the conservation of resources is also considered. After each of the controllable and uncontrollable variables is defined and analysed, a detailed analysis is made of various methods of mine valuation, with the objective being to identify the valuation method which most closely relates to the value of the firm. Then a model is constructed which will give the mine-life annual cash flows for a given orebody under various concentrator-capacity--cut-off-grade combinations. These cash flows are then converted to internal rates of return and benefit-to-cost ratios, which are contoured for various cut-off grades and concentrator capacities under various metal prices. The model assumes an orebody with a tonnage of 40e ⁽²ˉ ⁵x⁾ million tons, where x is the cut-off grade, in percent copper. Contour plots of benefit-to-cost ratio and internal rate of return were constructed for cut-off grades ranging from 0% to 1% copper, and for concentrator capacities ranging from 5000 tons-per-day to 50,000 tons-per-day, at net smelter returns of 40¢ per lb. to per 46¢ per lb. of contained copper. The tax system under which the highest profits are attained is Canadian tax laws with pre-1968 British Columbia taxes. The operation is least profitable under United States tax laws. However, optimal plant size is least sensitive to changes in metal price under United States tax laws, and most sensitive to price changes under Canadian tax laws with pre-1968 British Columbia taxes. Similarly, optimal cut-off grade is most insensitive to changes in metal price under Canadian tax laws with pre-1968 British Columbia taxes, and most sensitive to product price changes under United States tax laws. Therefore, it can be shown that under United States tax laws, the response of an operation to changing product prices would be to change the optimal cut-off grade, while in Canada, particularly under pre-1968 British Columbia taxes, the response would be to change the optimal operating capacity. Therefore, American tax laws provide the greatest flexibility for responding to changes in product price. The tax system which produces the greatest degree of conservation of resources, as is reflected by completeness of ultimate extraction, is the American case. The lowest extraction level would result under Canadian taxes, with pre-1968 British Columbia/taxes. / Business, Sauder School of / Graduate

Thesis submitted in fulfilment of the requirements for the degree of Master of Management in Finance & Investment in the Faculty of Commerce Law and Management Wits Business School, Johannesburg 2016 / This thesis reviewed research papers, reports, conference documents and policy documents that looked at financial models used to finance RE projects in Brazil, China, India and South Africa.The comparison between the financing models revealed the following; Both Brazil and China’s financing model is a centralised government led model which might not necessarily work in the South African context. The India decentralised model is similar to the South African model, with the exception that corporate finance is widely used in India and Project Finance in South Africa. Thus there are lessons to be learnt from each country, however no single country financing model was found to be suitable for South Africa. Accordingly, this paper therefore recommends that South Africa’s model be altered to incorporate project bonds. The use of these bonds in the current financial model will ensure that banks are able to lend to projects on short term basis; thus, managing their liquidity and their asset--liability effectively. Further, some institutional investors have shown an interest in funding projects at the construction stage, and the inclusion of project bonds would ensure that more of these investors play a role in financing projects. Key Words GDP-Gross Domestic Product; GW- Gigawatts; DoE-Department of Energy; REIPPPP- Renewable Energy Independent Power Producer Procurement Programme; BEE-Black Economic Empowerment; RE-Renewable Energy; SSA-Sub Saharan Africa; PPA-Power Purchase Agreement; FIT-Feed In Tariff; DFIDevelopment Finance Institution; MDB-Multilateral Development Bank / GR2018

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