Final answer:
The financing type involving borrowing money to be paid back with interest is B. Debt financing. It includes bank loans or bonds, allowing firms to retain control without diluting ownership. The correct option is B.
Step-by-step explanation:
The type of financing that involves borrowing money from a lender that must be paid back, typically with interest, is B. Debt financing. This form of financing can include getting loans from banks or issuing bonds. When a firm chooses debt financing, it commits to making scheduled interest payments over time, regardless of its income levels.
The primary advantage of this option is that the firm retains control over its operations, as it does not involve selling company ownership to shareholders.
In contrast, equity financing involves issuing stock and selling a portion of the company's ownership, which then requires the firm to answer to a board of directors and its shareholders. The correct option is B.