Debt funding of large Investment and Business Projects
Debt funding of large Investment and Business Projects Successful commercial activity requires the attraction of funding sources that meet the production and investment needs of the business. To maintain financial liquidity and business continuity, it is necessary to select the best funding sources that meet certain criteria in terms of cost of capital and time. All investment costs must be covered by the planned cash flows in accordance with the schedule. Each of the sources of equity financing and debt financing differs in terms of receipt of funds, weighted average cost of capital (WACC) and other criteria. The consequences of using inappropriate funding sources can be serious (for example, a high risk of insolvency or an unfavorable change in the capital structure). Since external resources are very often used for business development, the most important decision for any company is the right choice of a source of debt funding for investment projects. Decision-makers must analyze