For the Typical Small Business, the Primary Source of Equity

question 29

Multiple Choice

For the typical small business, the primary source of equity capital for financing growth is:

• A)operating profits.
• B)outside investors.
• C)spontaneous debt financing.
• D)retained earnings.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Cash Flows

The aggregate sum of funds flowing in and out of a company, particularly influencing its liquid assets.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Initial Investment

The amount of money used to start a project, purchase assets, or acquire a stake in a business.