The Cogeneration Project's target capital structure is 25 percent equity and 75 percent debt. The proportions of equity and debt were determined by analyzing the profitability of the project. The greater the level of operating income that can be contractually assured, the greater the amount of debt a project can support. Cogeneration Company's debt will be nonrecourse to the equity investors. Long-term lenders must look solely to the project's cash flow for their repayment. The equity investors will receive their returns in the form of tax benefits, dividends paid out of excess cash flow from the project (i.e., after payment of debt service), and any residual value of the cogeneration plant.