Question

The financial manager for Eastern Bay Brewery is working with the firm's marketing department to bring out a new line of pumpkin ale. The new product development and subsequent production will require a long-term investment of funds by the company. Which of the following sources of financing would be representative of such a long-term funding requirement

Answer 1

Issuance of bonds

Step-by-step explanation:

Base on the scenario been described in the question, the manager of Eastern Bay Brewery are planning bringing a new line of pumpkin ale that will require much funds because of the production of other goods. The source of the income that the company will need for a long term investment is issuance of bond. A bond is a fixed income instrument that represents a loan made by an investor to a borrower typically corporate or governmental.

Answer 2

The complete question should be:

The financial manager for Bellandro Bay Brewery is working with the firm's marketing department to bring out a new line of pumpkin ale. The new product development and subsequent production will require a long-term investment of funds by the company. Which of the following sources of financing would be representative of such a long-term funding requirement?

a) Issuance of bonds

b) Commercial paper

c) Line of credit

d) Factoring

Answer: Issuance of bonds

Step-by-step explanation:

Bellandro Bay Brewery can get capital to fund their new product by obtaining a bond to be repaid after a long period. A bond is a sum of money borrowed to be repaid, it is similar to a loan in that it is being repaid but the duration for repayment of a bond is longer, as a bond is paid in full at the maturity date of the bond.