Question
In: Finance
Firms often make decisions that involve spending money in the present and expecting to earn profits...
Firms often make decisions that involve spending money in the present and expecting to earn profits in the future. Firms often need raise the financial capital to meet various needs that include projects, equipment, staffing, expansion, and more.
- Discuss the top three sources for companies to borrow money from, for a new building purchase, what are the typical lending interest rates, required collateral, and repayment terms at each of the three sources.
Solutions
Expert Solution
| Source of Money | Interest rate | Collateral | Repayment Terms |
| Internal Accruals (Profits generated by the form itself) | This is an equity finance, hence there is no interest rate | No collateral | No mandatory or scheduled repayment terms |
| Debt (External borrowing) | Typically in the range of 4% - 6% | The building being purchased | Equated monthly installment over a term of 4 or 5 years |
| Equity (External equity) | This is an equity finance, hence there is no interest rate | No collateral | No mandatory or scheduled repayment terms |
jeff jeffy answered 2 years agoRelated Solutions
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11 months of 2021, gains from selling trading securities totaled $4
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following selected transactions relate to American's investments in
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to earn profits on short-term differences in price. For the first
11 months of 2021, gains from selling trading securities totaled $8
million, losses from selling trading securities were $11 million,
and the company had earned $5 million in interest revenue. The
following selected transactions relate to American's investments in
trading securities and equity securities during December 2021, and
the first week of 2022. The company's fiscal year ends on December...
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