What are the many different sources of funding to finance firms’ R&D expenditures? If an entrepreneur uses personal funds is there a cost for financing?
What will be an ideal response?
Several sources are available for financing firms’ R&D activities. The firm can borrow money from a bank. More established firms may be able to issue bonds to raise money for the venture. Profitable firms can also retain their earnings and use them to finance R&D expenditures. Smaller start-up firms may be able to obtain venture capital for a research project. Individual entrepreneurs may also use personal savings to finance the R&D for a new company. In this last case, the marginal cost of the financing using personal funds is the foregone interest rate.
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Which of the following is correct?
a. capital flight from the United States decreases net capital outflow b. an increase in the government budget deficit creates no change in net capital outflow c. if the U.S. imposes a restriction on imports, net capital outflow increases d. None of the above is correct.
By looking at the graph showing growth of government expenditures as a percentage of GDP in the United States from 1929 to 2017, we can see that expenditures were lowest in ______.
a. 1929 b. 1945 c. 1959 d. 2005