A Business Will Be Likely to Borrow to Fund Projects

question 274

Multiple Choice

A business will be likely to borrow to fund projects if the:

• A) rate of return on the project is less than the interest rate on the loan.
• B) project will produce a good or service that is in high demand.
• C) rate of return on the project is at least as high as the interest rate on the loan.
• D) minimum efficient scale will be attained.

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Definitions:

Cash Discount

A deduction from the invoice price that a seller allows a buyer to encourage prompt payment.

Partial Payment

A payment that is made towards a bill or a debt that is not the full amount owed at that time.

Woolen Fabrics

Textile materials made from wool, characterized by their warmth, durability, and softness.

Cash Discount

A reduction in the price of an item for sale, offered in exchange for immediate payment or payment within a short period.