Which of statements a) through d) concerning project finance is FALSE?
A) Debt in a project finance arrangement is contractually linked to the cash flow generated by the project.
B) Governments participate in project finance in the form of infrastructure support, guarantees, and assurances against political risk.
C) In project finance, claims are contractually tied to the cash flows of the project.
D) The cash flows of a project are commingled with other corporate cash flows.
E) The project is a separate legal entity and relies heavily on debt financing.

Question

Quizplus · Accepted Answer

The statement that is false is D. In project finance, the cash flows of the project are usually kept separate from other corporate cash flows, and often the project is structured as a separate legal entity. This helps to limit the risk for the project's investors and lenders, and makes it easier to manage the project's finances.

Which of Statements A) Through D) Concerning Project Finance Is