Question

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Mark’s business wants to diversify into energy efficient technology. Classify the sources of finance for this new business.

Answer 1

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Issued a $1,000 security that can be converted into 100 shares after 5 years. Convertible Fund

Granted tax incentives for research and development. Government

Sanctioned along-term loan in exchange for collateral. Banks

Buy 10% of the company in exchange for cash. Venture Capitalist

Impressed with the business plan, Mr. Doyle provided $75,000. Angel Investor

Secured $100,000 from the sale of common stock. Equity

Answer 2

See below

Step-by-step explanation:

1. Issued a $1000 security that can be converted to 100 shares after five years:

Convertible bond; bonds are debt instruments. A convertible bond is special because they have the option to convert the debt to capital.

2. Granted tax incentive for research and development.

Government :the government support business through incentives such as tax cuts and grants.

3. Sanctioned along-term loan in exchange for collateral:

Bank. A loan from the bank is a source of capital for a business.

4. Impressed with the business plan, Mr. Doyle provided $75,000.

Angel investor: they are wealthy individuals who offer capital to start-up based on their proposals and business plans.

5. Secured $100,000 from the sale of common stock:

Venture capitalist: They invest in successful businesses by buying securities with profit expectations.