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The directors of a famous I.T company have decided to set up a new firm in Pune, with an estimated cost of rupees of eight crores. Which of the following sources of finance would be most suitable?
- a)Public deposits, Short-term loans from commercial banks, Trade credit
- b)Equity shares, Preference shares, Debentures
- c)Trade credit, Factoring, Banks
- d)Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.
Correct answer is option 'B'. Can you explain this answer?
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The directors of a famous I.T company have decided to set up a new fir...
Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.
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The directors of a famous I.T company have decided to set up a new fir...
Answer:
The most suitable sources of finance for setting up a new firm in Pune with an estimated cost of eight crores would be equity shares, preference shares, and debentures. These options fall under the category of long-term finance, which is appropriate for investment in long-term assets such as setting up a plant.
Equity Shares:
Equity shares represent ownership in a company and offer the highest potential for returns. By issuing equity shares, the company can raise the required capital from investors who become shareholders and have a claim on the company's profits. This is a popular source of finance for companies that are looking for long-term investment.
Preference Shares:
Preference shares are a type of share capital that carries certain preferential rights over ordinary shares. These rights may include a fixed dividend rate, priority in receiving dividends, and preference in case of liquidation. By issuing preference shares, the company can attract investors who are looking for a fixed income stream and are willing to take a higher risk than bondholders.
Debentures:
Debentures are long-term debt instruments issued by a company to raise funds. They carry a fixed interest rate and have a specified maturity period. By issuing debentures, the company can borrow money from investors and promise to repay the principal amount along with interest at a specified date in the future. This allows the company to raise capital without diluting its ownership.
These sources of finance are suitable for setting up a new firm because they provide the necessary funds for long-term investment. Equity shares, preference shares, and debentures allow the company to raise a large amount of capital, which is essential for setting up a plant. Additionally, these sources of finance do not impose any immediate repayment obligations, allowing the company to focus on its operations and generate income before repaying the funds.
In conclusion, the most suitable sources of finance for the directors of the I.T company to set up a new firm in Pune would be equity shares, preference shares, and debentures. These options provide the necessary long-term capital for investment in a plant, without immediate repayment obligations.
The most suitable sources of finance for setting up a new firm in Pune with an estimated cost of eight crores would be equity shares, preference shares, and debentures. These options fall under the category of long-term finance, which is appropriate for investment in long-term assets such as setting up a plant.
Equity Shares:
Equity shares represent ownership in a company and offer the highest potential for returns. By issuing equity shares, the company can raise the required capital from investors who become shareholders and have a claim on the company's profits. This is a popular source of finance for companies that are looking for long-term investment.
Preference Shares:
Preference shares are a type of share capital that carries certain preferential rights over ordinary shares. These rights may include a fixed dividend rate, priority in receiving dividends, and preference in case of liquidation. By issuing preference shares, the company can attract investors who are looking for a fixed income stream and are willing to take a higher risk than bondholders.
Debentures:
Debentures are long-term debt instruments issued by a company to raise funds. They carry a fixed interest rate and have a specified maturity period. By issuing debentures, the company can borrow money from investors and promise to repay the principal amount along with interest at a specified date in the future. This allows the company to raise capital without diluting its ownership.
These sources of finance are suitable for setting up a new firm because they provide the necessary funds for long-term investment. Equity shares, preference shares, and debentures allow the company to raise a large amount of capital, which is essential for setting up a plant. Additionally, these sources of finance do not impose any immediate repayment obligations, allowing the company to focus on its operations and generate income before repaying the funds.
In conclusion, the most suitable sources of finance for the directors of the I.T company to set up a new firm in Pune would be equity shares, preference shares, and debentures. These options provide the necessary long-term capital for investment in a plant, without immediate repayment obligations.
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The directors of a famous I.T company have decided to set up a new firm in Pune, with an estimated cost of rupees of eight crores. Which of the following sources of finance would be most suitable?a)Public deposits, Short-term loans from commercial banks, Trade creditb)Equity shares, Preference shares, Debenturesc)Trade credit, Factoring, Banksd)Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.Correct answer is option 'B'. Can you explain this answer?
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The directors of a famous I.T company have decided to set up a new firm in Pune, with an estimated cost of rupees of eight crores. Which of the following sources of finance would be most suitable?a)Public deposits, Short-term loans from commercial banks, Trade creditb)Equity shares, Preference shares, Debenturesc)Trade credit, Factoring, Banksd)Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The directors of a famous I.T company have decided to set up a new firm in Pune, with an estimated cost of rupees of eight crores. Which of the following sources of finance would be most suitable?a)Public deposits, Short-term loans from commercial banks, Trade creditb)Equity shares, Preference shares, Debenturesc)Trade credit, Factoring, Banksd)Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The directors of a famous I.T company have decided to set up a new firm in Pune, with an estimated cost of rupees of eight crores. Which of the following sources of finance would be most suitable?a)Public deposits, Short-term loans from commercial banks, Trade creditb)Equity shares, Preference shares, Debenturesc)Trade credit, Factoring, Banksd)Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.Correct answer is option 'B'. Can you explain this answer?.
The directors of a famous I.T company have decided to set up a new firm in Pune, with an estimated cost of rupees of eight crores. Which of the following sources of finance would be most suitable?a)Public deposits, Short-term loans from commercial banks, Trade creditb)Equity shares, Preference shares, Debenturesc)Trade credit, Factoring, Banksd)Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The directors of a famous I.T company have decided to set up a new firm in Pune, with an estimated cost of rupees of eight crores. Which of the following sources of finance would be most suitable?a)Public deposits, Short-term loans from commercial banks, Trade creditb)Equity shares, Preference shares, Debenturesc)Trade credit, Factoring, Banksd)Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The directors of a famous I.T company have decided to set up a new firm in Pune, with an estimated cost of rupees of eight crores. Which of the following sources of finance would be most suitable?a)Public deposits, Short-term loans from commercial banks, Trade creditb)Equity shares, Preference shares, Debenturesc)Trade credit, Factoring, Banksd)Setting up of a plant means funds are required for investment in long-term assets. There are various sources of long-term finance, such as equity shares, preference shares, and debentures.Correct answer is option 'B'. Can you explain this answer?.
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