Before Putting Their Money into a Business Idea, Potential Lenders

question 66

Multiple Choice

Before putting their money into a business idea, potential lenders and investors:

• A) look for entrepreneurs who have evaluated the risk in the business venture realistically and have a strategy for addressing it.
• B) want proof that the business will become profitable.
• C) want proof that the business will produce a reasonable return on their investment.
• D) All of the above

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Definitions:

Discount Method

A financial strategy where the interest and financing charges are calculated at the time of the sale and deducted from the principal before the loan is disbursed.

Actual Interest Rate

The real rate of interest earned or paid on an investment, loan, or savings, taking into account compounding and fees.

Cash Discounts

Reductions in the price of goods or services, offered to customers as an incentive for early payment.

Discount Method

The discount method is a way of understanding the value of money received in the future as being less valuable than money held today, often used in calculating the present value of future cash flows.