Foundations of Financial Management
Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Chapter 14, Problem 6DQ
Summary Introduction

To explain: The more dependable source of financing from the perspective of the corporation between external and internal funds.

Introduction:

Internal sources:

They are developed within the business from the existing assets or activities. Investment from owner, sale of stock, retained earnings, debt collection, and sale of fixed assets are the internal sources of financing.

External sources:

They refer to the cash flow that is generated from sources that are outside the business. These include loans from banks, preference shares, trade credit, and factoring, etc.

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Single-payment loan repayment Personal Finance Problem A person borrows $280 that he must repay in a lump sum no more than 8 years from now. The interest rate is 7.7% annually compounded. The borrower can repay the loan at the end of any earlier year with no prepayment penalty. a. What amount will be due if the borrower repays the loan after 2 year? b. How much would the borrower have to repay after 4 years? c. What amount is due at the end of the eighth year? a. The amount due if the loan is repaid at the end of year 2 is $ (Round to the nearest cent.) b. The repayment at the end of year 4 is $ (Round to the nearest cent.) c. The amount due at the end of the eighth year is $ (Round to the nearest cent.)
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