Project finance is a technique where it is appropriate to use project-specific financing costs as required rates of return. This technique has gained popularity in recent years; it has been used to finance a variety of projects, including oil and gas development projects, R&D partnerships, and factory construction. Project finance makes sense when a project’s accounts are separated from the firm’s other asset and cash flow accounts. Additionally, the project’s assets must be financed by specific sources of funds whose only recourse in the case of default or project failure is to the assets of the project; in other words, the sponsoring firm is not liable for the debts of the project. Such a project also must have a definite termination time, rather than oper- ating as a going-concern. In such cases, we can compare the project-specific financing costs to the projects returns. Returns in excess of project costs accrue to the parent firm’s shareholders.