There Are Two Major Advantages of Getting a Loan Vs

question 8

Multiple Choice

There are two major advantages of getting a loan vs. investment capital:

• A) the money doesn't have to paid back and lenders typically take an active interest in their borrowers
• B) banks are reliable sources of funding for startups and interest payments are tax deductible
• C) the money doesn't have to paid back and no ownership in the firm is surrendered
• D) no ownership in the firm is surrendered and interest payments are tax deductible
• E) banks are reliable sources of funding for startups and lenders typically take an active interest in borrowers

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Definitions:

Marginal Cost

The additional financial cost due to the creation of an extra product or service unit.

Average Total Cost

The average total cost is the total cost of production divided by the quantity of output produced.

Marginal Cost Curve

A visual diagram that illustrates the variation in the cost to produce an additional unit of a product as the quantity produced changes.

Average Total Cost Curve

A curve that shows the average cost per unit of output at different levels of production; it typically has a U-shape.