Final answer:
The key issues in long term financing are Owner's equity, Ability to service loan, and Inherent value of real asset. These factors are vital for determining a firm's capital structure and its capability to fund long-term investments. The correct answer is D) All of the above.
Step-by-step explanation:
The key issues in long term financing encompass several factors, including Owner's equity, Ability to service loan, and Inherent value of real asset. These factors are interconnected and essential to consider when a firm is determining its optimal capital structure and how it will fund its long-term investments and growth.
When considering owner's equity (D), the amount of capital that is attributed to the owners of a company plays a pivotal role in financing decisions. For long-term loans (B), the firm's ability to make regular interest payments and return the principal at maturity is crucial to avoid default. This ability is generally referred to as the 'ability to service a loan.' Lastly, the inherent value of real assets (C) is fundamental as these assets often serve as collateral for long-term financing and their valuation affects the borrowing capacity of the firm.
Therefore, the correct answer to the student's question is D) All of the above. Each component is a key issue in long term financing, where companies must carefully balance and manage these aspects to ensure financial stability and growth.