Chapter 29, Problem 1MCQ

To determine

Factors on which business should decide whether or not to borrow money

Explanation of Solution

Banks and different industrial creditors are famous resets of investment for businesses. Most creditors require a stable commercial enterprise plan, a properly tune record, and masses of collateral. These are usually tough to return with the aid of using for startups. If the business is doing well and the income statement, cash flow budget, and statement of net worth are presented, the company may be able to raise additional capital.

Businesses compare the rate of return on the project and the interest rate before deciding whether to borrow money to fund a project.

Hence, the correct option is C.

Economics Concept Introduction

Introduction:

If your company doesn't have an Apple balance sheet, you'll probably need to access capital through corporate lending. Even many large companies regularly seek capital injections to meet short-term commitments. Finding the right financing model is very important for small businesses. Borrowing money from the wrong source can cost you part of your business or lock you in repayment terms, hindering your growth for years to come.

There are many ways to raise money for your new business. You can borrow from an accredited lender, raise money from family and friends, raise money from investors, or use a retirement account, but the latter is not recommended.