University of Twente Student Theses


Investment financing in the education sector

Heuvelink, L.E. (2014) Investment financing in the education sector.

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Abstract:A report on the objectives of four types of capital financing for durability investments. Excess cash turns out to be the most desirable option for the educational institution that is researched, since it implies no handling costs, is readily available and no managerial interference is present. Next to this, a bank loan and treasury finance are the best external capital options. However, it takes time and money to set up agreements for external capital and an interest has to be paid. The least desirable financing option is the usage of an energy service company. Such a company provides the initial investment, implementation and maintenance of durability investments with a guaranteed performance of the investment. As long as the organization is equipped well enough itself and has the knowledge base that is needed, ESCOs are not interesting for the organization. Reasons for this are high costs, long negotiation time and the need for organizational wide commitment to cooperate the ESCO. When comparing the trade-off, pecking-order and agency costs theories, the pecking-order theory is most applicable for the educational institution because of the preference of internal finance over external finance, which is in line with the recommendation of using he excess cash.
Item Type:Essay (Master)
Stichting Carmelcollege, Hengelo, Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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