If Debt Is to Be Used to Finance a Project

question 63

True/False

If debt is to be used to finance a project, then when cash flows for a project are estimated, interest payments should be included in the analysis.

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Definitions:

Limited Liability

Limited liability is a form of legal protection for shareholders and owners that limits their loss to the amount invested in the company.

Transferability

Transferability is the ability of an asset to be transferred or moved from one party to another with ease.

Pre-tax Profit

Earnings of a business before any tax is applied; also known as gross profit or operating profit.

C Corporation

A legal structure for a corporation in which the owners are taxed separately from the entity, subject to corporate income tax.