Project finance is essentially a way to get a project done while protecting the other assets a company might have. As the project sponsor, your company, B Corp., that wants to build the project, would essentially set up a second company that will build the project. This smaller company is known as the project company; we’ll call it C Co. B Energy will own most or all of the equity in C and likely will run the day-to-day operations, too. Additional funding will come from independent lenders, who will give C loans. If the project goes wrong for any reason, C will go bankrupt, but, as the project sponsor, your company, B Energy, won’t be responsible for repaying any of C’s debts. Although a little complicated, this kind of arrangement is used all the time in B energy, infrastructure, and construction projects. In the case of energy projects, let’s break it down a little further.

As the project sponsor, the company looking to do the project, B Energy, could be a wind developer planning to build a new wind farm, an oil company starting development of a new resource, or a transmission company planning a new transmission corridor. An established company, this business has assets, liabilities and equity on its balance sheet. It would also have the in-house expertise to evaluate projects in the field and the connections to get them done. Even so, the equity holders in companies like B Energy Corp. want to limit their risk in case the project doesn’t work out.

In the public sector, this is like revenue bonds. The only source of prepayment is the project itself.

Safer bonds are general obligation bonds. ALL assets are of the company or government entity pledged as security for repayment.

Conclusion:
Ordinary lending allows some fluctuations in usage of funds to the borrower, while project financing is for a specific purpose and heavily monitored for use of funds and for generation of promised/projected revenue to pay back loan.

Additional risk that global investors would be facing when he is investing into these companies shares and bonds over next 6 to 12 months are as follows-

A. Exchange rate risk is one of the major risk when any Global investor will be investing into the Australian markets.(risk for shares for both the companies)

B. Another risk related to investment in Australian markets is monetary policy changes by the Australian Central banks because monetary policy changes by the Australian Central Bank will be risky for the investors who are investing into the Australian securities from the Global point of view.(risk for bonds for both the companies)

C. change in the metal prices in Australia because these two companies are primarily working in the metal industry in Australia.(risk for shares for both the companies)

D. Change in rules and regulation governing the metal industries in Australia will be reflecting upon the the profits of the company and they will be reflecting through share prices and there will be risk for global investor.(risks for shares and bonds for body companies)

E. political stability and instability in Australia is another factor which will be leading to risk for these global investors because they are not aware about the internal politics of Australian markets.(risks for bonds for both the companies)

F. Risk of going Global by these companies and getting merged with other companies are another factor that should be factored into the Global investors.(risk for BHP shares and Bond as it is trying to go global)

I. risk related to current impending recession which can be a global recession will be impacting the performance of these companies and global investors should be getting affected by the return of this companies(risk for bonds for both companies)

Answer: will be reported at $106,500

Explanation and calculation:

Gross profit = Sales-Cost of goods sold = $255,000-$148,500 = $106,500