General Studies · Project Life Coverage Ratio
In large-scale infrastructure projects, lenders evaluate the Project Life Coverage Ratio (PLCR) alongside the Loan Life Coverage Ratio (LLCR). The PLCR is distinct because it assesses:
- 1the net present value of the project divided by the total initial capital investment required at the start.
- 2the margin of safety provided by the debt service reserve account relative to the next six months of interest payments.
- 3the relationship between the book value of tangible assets and the market value of the firm's equity.
- 4the coverage of outstanding debt by the present value of cash flows available for debt service over the entire economic life of the project.✓
Correct answer
the coverage of outstanding debt by the present value of cash flows available for debt service over the entire economic life of the project.
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