When you finance a project partly with debt, you should still view the project as if it were all equity-financed, treating all cash outflows required?

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Business

Ashlynn Mahoney

15 September, 23:33

When you finance a project partly with debt, you should still view the project as if it were all equity-financed, treating all cash outflows required?

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Answers (2)

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Lucia Daniel · Answer 1

Even if a project is partly financed with debt, it should be viewed as if it were all equity financed. All the cash outflows should be treated as coming from stockholders and all the cash inflows as going to them.

Webb · Answer 2

It is a corporate principle of a finance project written on the Principles of Corporate Finance.

The book explains not to less the debt from the investment or even count the interest. The project should always be in equity finance, all focused on the project cash flow itself.