Which of the following statements is false about "borrowing capacity"?

Question

Quizplus · Accepted Answer

Borrowing capacity is not synonymous with project debt, as it refers to the total amount of new debt that a firm can raise based on its creditworthiness and existing debt obligations. Project debt, on the other hand, refers specifically to the debt financing used to fund a particular project. The other statements are true: borrowing capacity is important in international capital budgeting due to the prevalence of concessionary loans, it creates tax shields for APV analysis, and it is influenced by the firm's optimal capital structure.

Which of the Following Statements Is False About "Borrowing Capacity