Question

    Which of the following is an example of a project finance structure?

    A Corporate finance Correct Answer Incorrect Answer
    B Mezzanine finance Correct Answer Incorrect Answer
    C Asset-based finance Correct Answer Incorrect Answer
    D Build-Operate-Transfer (BOT) financing Correct Answer Incorrect Answer
    E Joint Ventures Correct Answer Incorrect Answer

    Solution

    Build-Operate-Transfer (BOT) is a common project finance structure used for infrastructure projects, such as highways, bridges, airports, and power plants. Under a BOT financing structure, a private sector developer is responsible for financing, designing, constructing, and operating the project for a certain period of time (usually 20-30 years) before transferring ownership and operation of the project back to the public sector or another designated entity. During the operation phase, the private sector developer collects revenue from the project (such as tolls, fees, or user charges) and uses this revenue to service the project's debt and to generate returns for its investors.

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