Optimal funding analysis: A report on a software developed for American Express Bank Limited

Abstract

This report deals with an attempt made to develop a software that would determine the optimal mix of Debt and Equity which would be required to fund a new project undertaken by a company. The limiting constraints are the Debt! Equity ratio, and the ability to service the debt borne by the company. The cast of the project would have to be funded in the same proportion of Debt and Equity that is specified by the Debt! Equity ratio. In addition, it is essential for the company to generate adequate funds to pay off not only the interest due on the loans taken, but also the loan instalments each year.