Suppose you finance a project partly with debt, you should neither subtract the debt proceeds from the required investment, nor would you recognize the interest and principal payments on the debt as cash outflows.

Question

Quizplus · Accepted Answer

Debt proceeds are not subtracted from the required investment because they are not an outflow of cash. Interest and principal payments on the debt are not recognized as cash outflows because they are already included in the calculation of the required investment.

Suppose You Finance a Project Partly with Debt, You Should