Final answer:
Firms raise financial capital for capital projects through sources like investors, reinvesting profits, borrowing, and selling stock. Financial capital funds these projects, while profits result from a firm's operations.
Step-by-step explanation:
Firms raise the financial capital required for capital projects in several ways, including early-stage investors, reinvesting profits, borrowing through banks or bonds, and selling stock.
These sources of financial capital allow the firm to pay for projects such as purchasing machinery, building new plants, or funding research and development. When business owners choose financial capital sources, they also consider how they will pay for them.
Financial capital
is the money used to finance a firm's operations and investments.
It includes both debt and equity financing.
Profits
refer to the positive difference between a firm's total revenue and total expenses.
Financial capital is used to fund capital projects, while profits are the result of a firm's operations and can be reinvested or used to pay back capital providers.