Choosing the Right Financing 61map the cash flow consequences of these two decision points (financing
now or waiting until a future budget) to demonstrate to the city’s CFO
and city council that financing now was a better financial decision than
waiting for cash. In most instances, the lost energy savings incurred by
waiting for one year are greater than the net present value of all the inter-
est payments of most financing, making “do it now” the better financial
decision. This is counter intuitive and surprises most decision makers.
Today, this city supports the expeditious implementation of energy effi-
ciency projects.
Another common argument for delay is waiting for a lower interest
rate offering rather than financing at a higher rate that is available imme-
diately. This situation may occur when waiting for funds from a future
bond issue or for a low-cost specialty fund to replenish itself, versus ac-
cepting an immediately available third-party financing offering. The CFO
Calculator allows you to compare two different interest rate offerings, and
it will compute how long you can wait for the lower interest rate before
the lower rate begins to cost more. It does this by including the forfeited
Figure 3-1. This is a sample screen capture of the “cash flow” tab from
the CFO Calculator Excel Spread Sheet supporting the “do it now”
argument.