Final answer:
Firms raise financial capital for future profits through various means, including early-stage investors, reinvesting profits, loans, and selling stock. Early-stage companies must convince investors of future returns, as seen with Bill's invention. Gizmo Company's gadgets illustrate investments that can yield returns for both the company and society.
Step-by-step explanation:
Firms often need to raise financial capital for various projects such as research and development, buying machinery, or building new facilities. These investments are made with the expectation of future profits. There are four main ways for firms to acquire the financial capital: from early-stage investors, by reinvesting profits, through borrowing from banks or issuing bonds, and by selling stock. The decision on which source to utilize depends on factors such as the firm's current profitability, scale of the project, and the cost of capital from each source.
For early-stage companies without a demonstrable profit history, the challenge lies in convincing investors to provide capital in exchange for a promised rate of return in the future. This scenario applies to Bill and his invention for purifying drinking water, as he might need to tap into early-stage investors or rely on other sources of capital to bring his project to fruition.
When looking at the Gizmo Company as an example, if their new gadgets are expected to yield a minimum 6% return for the company, with an additional 5% social benefit, the total societal return would be at least 11%. Such investments not only benefit the company but also provide a broader societal advantage, illustrating the potential for companies to contribute positively to society while seeking profit.