A project financing arrangement refers to:
A) an arrangement where a company creates a special-purpose entity to perform a special project.
B) an arrangement where a company borrows from its subsidiary to finance a project.
C) an arrangement where a company promises future repayment by placing purchased assets in an irrevocable trust.
D) an arrangement where a company finances a project from a sinking fund established for bond repayments.

Question

Quizplus · Accepted Answer

Project financing arrangement refers to creating a special-purpose entity (SPE) to perform a specific project. The SPE is separate from the parent company and has its own assets, liabilities, and funding sources. This setup helps to isolate the parent company from any risks and liabilities associated with the project.

A Project Financing Arrangement Refers To