Financing the Four Sectors: Companies, Households, Governments and Overseas Through Credit and Capital Markets
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First, project evaluation, which means calculating whether or not a proposed project is financially viable, i.e. will it, probabilistically, generate the returns that a bank lender or investors expect for the level of risk it presents? This is generally done using the discounted cash flow approach to project evaluation which in the case of a company is part of the capital budgeting process.
Second, the pooling (collection) of small savings into a unit of financing large enough to meet the needs of the project.
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