Development of the Financial Feasibility Plan

Appendix B shows the development of the FFP based on the user flow hypotheses and possible revenues in relation to the different types of profit that the overall offer of services produces.

It should be noted that a WACC of 8.98% was used to discount the cash flows, obtained with the following equation [53,54]:

$$\text{WACC} = \text{K}\_{\text{E}} \frac{E}{D+E} + \text{K}\_{\text{D}} \frac{D}{D+E} (1-t) \tag{4}$$

where:

E = equity capital

D = debt

KE = rate of return on equity capital

KD = rate of return on debt

t = tax rate used to calculate the tax benefit resulting from the deductibility, for direct taxes purposes, of financial charges (so-called tax shield)

#### **7. Discussion of the Results**

This paper presents the development of a technical and economic–financial prefeasibility study related to a project aimed at reusing underutilized cultural assets for "Rifugio Diffuso". Firstly, the study examined and compared various examples at the national and international level to a hypothesized a management model [29,31,33–44,46,65,68–70]. This model envisioned entrusting the management of the para-accommodation structure to third parties (private individuals). The purpose of this approach was to promote a management style driven by entrepreneurial incentive and ability.

The investment of the public administration in the purchase, renovation of the chalets, and recovery of the existing road network was approximately 1.15 million euros. In particular, for the "private" function of the widespread shelter, the potential annual demand was defined, and a concise financial plan was developed based on the functions that could be settled: 10 rooms for a total of 40 beds, common areas, and a bar/restaurant. The analysis of the demand revealed that the potential users of the structure were mainly school children (currently amounting to approximately 3000 visitors/year) along with nature-loving families and trekking tourists.

In summary, the manager's initial investment of 60,000.00 euros, consisting of 30% equity and 70% debt, covered the purchase of furnishings and equipment for rooms, common areas, and bar/restaurant premises. During the 20-year management phase, the cash flows became positive, starting from the second year, indicating a profitable investment.

In the FFP drafting, it was assumed that the manager started paying a rent of 9000.00 euros from the fifth year. In this way, the initial public investment was partially amortized.

The financial sustainability of the project, measured in terms of bankability, focuses on the project's ability to generate sufficient cash flows to guarantee the repayment of the acquired loans. This analysis involves two critical coverage ratios: the Debt Service Cover Ratio (DSCR) and the Loan Life Cover Ratio (LLCR). These ratios offer valuable insights into the project's capacity to meet its financial obligations and ensure long-term repayment of the loans.

In the specific case of the 'Rifugio Diffuso' project, both indices assume values well above unity (equilibrium point), indicating a strong financial position and sustainability:


These high values for both the DSCR and LLCR demonstrate the project's strong financial health and its capacity to manage its financial obligations effectively throughout the duration of the loan.
