Allied uses debt in its capital structure, so some of the money used to finance the project will be debt.?

Allied uses debt in its capital structure, so some of the
money used to finance the project will be debt. Given
this fact, should the projected cash flows be revised to
show projected interest charges?

Of course, but a good cash flow model is going to incorporate both cost of equity AND cost of debt.

No debt on the balance sheet looks great, but at these still historically low rates, carrying some debt may be wise if the company's ROE, ROCI and cash flow is strong.

What's the alternative?
Selling stock simply dilutes the investment of your shareholders and limits future options.
Using your operating cash is fine, but I'd rather see my company load up on cash $ equivalents to hedge against future short term struggles. I mean really...they can put these short term assets in money markets and treasury bills that pay almost as much as the interest on debt! (Look at Grey Wolf for example)

So while you should consider the interest expense, if your total cost of capital incorporates a risk adjustment, most companies are going to show a better discounted cash flow value by raising capital from debt rather than issuing equity and burning up operating cash.

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