Economics Of Financed Projects

The present worth of a financed project has three distinct components: the project itself, its financing, and the effect on the external funding remaining for other projects. Failure to recognize the last component results in a phenomenon known as leveraging in which the merit of a project is artificially inflated. This paper introduces the basic concepts of financing projects, and then it provides a succinct theoretical framework that allows this commonly occurring topic to be brought into the classroom, complete with examples.