Question

If a business wishes to acquire assets, what three options are at their disposal to raise funds?

Answer 1

Businesses can raise funds to acquire assets through early-stage investors, reinvesting profits, and borrowing through banks or issuing bonds.

Step-by-step explanation:

Firms can raise the financial capital they need to acquire assets in three main ways:

1. Early-stage investors: Businesses can seek funding from angel investors and venture capital firms in exchange for a share of ownership or equity in the company.
2. Reinvesting profits: Companies can use their own retained earnings to finance asset acquisition by reinvesting the profits generated by their operations.
3. Borrowing through banks or bonds: Businesses can take out loans from banks or issue bonds to raise funds for asset acquisition. These loans or bonds come with an obligation to repay the borrowed amount over time, with interest.

Each option has its own set of advantages and implications for the business, including the cost of capital and the potential dilution of ownership. Companies make these decisions based on their strategic financial planning and the potential for future growth and profitability.