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      Question

      In 'Project Finance', the 'Escrow Account' mechanism is

      used to: 
      A Avoid paying taxes to the government. Correct Answer Incorrect Answer
      B Ensure that project cash flows are used primarily to service debt before any other payments. Correct Answer Incorrect Answer
      C Keep the promoter's personal money separate from the company. Correct Answer Incorrect Answer
      D Transfer funds to foreign countries. Correct Answer Incorrect Answer
      E Store the gold reserves of the company. Correct Answer Incorrect Answer

      Solution

      An Escrow account ensures that all project revenues are deposited in one place, and the bank (lender) has the first right to use that money for loan repayments (Waterfall mechanism).

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