Debt finance, Finance Basics

Assignment Help:

Debt Finance

Debt finance is a fixed return finance like the cost as interest is fixed on the par value as face value of debt. This is ideal to require if there's a strong equity base. It is raised from external causes to qualifying companies and is obtainable in limited quantities. It is limited to as:

i) Value of safety.

ii) Liquidity situation in a specified country. It is ideal for companies whereas gearing permits them to raise more debt and so gearing level.

Categorization of Debt Finance

Loan finance - this is a common form of debt and is available in different terms generally short term. Medium term loans vary from 2 - 5 years. Long-term loans vary from 6 years and above

The terms are depend and relative on the borrower. This finance is requires on the source of Matching approach that is matching the economic life of the project to the term of the loan. It is prudent to use short-term loans for short-term ventures that are whether a venture is to last 4 years generating returns; it is prudent to raise a loan of 4 years maturity time.


Related Discussions:- Debt finance

Mony and finance, mony is differnt from wealth and income

mony is differnt from wealth and income

Jobbers or speculators - stock market, Jobbers or Speculators - Stock Marke...

Jobbers or Speculators - Stock Market 1. This is a dealer who that trades in securities in his own right like a principal. 2. He can set prices and make active the market w

Compute Interest Assignment, Based on the example in Lesson 2, compute your...

Based on the example in Lesson 2, compute your quarterly interest for three years if you deposit $500 at 8 percent, compounded quarterly. Remember to divide the 8 percent by 4 to g

Money market mutual funds (), why i cant found date for mmmfs like total as...

why i cant found date for mmmfs like total asset or number of share or return ???? i search alot and i found words instead of number

Choose Variables for a sensitivity analysis, You are asked to select three ...

You are asked to select three variables for a sensitivity analysis of weighted average cost of capital, what would you choose and why? Weighted average cost of capital is th

Nash equilibrium, Suppose that two players are playing the following game. ...

Suppose that two players are playing the following game.  Player A can choose either Top or Bottom, and Player B can choose either Left or Right.  The payoffs are given in the foll

Investment options - bond yields, John has just inherited $50,000 from his ...

John has just inherited $50,000 from his Uncle Ted. John is currently studying his Bachelor of Accounting degree at CQUniversity part-time and has three (3) years of study remainin

Advantages of using debt finance, Advantages of Using Debt Finance ...

Advantages of Using Debt Finance Interest on debt is a tax permit able expense and as that it is reduced via the tax allowance. The cost of debt is fixed regardless of

Cost of capital, capital structure of 38% common stock and 62% debt. A debt...

capital structure of 38% common stock and 62% debt. A debt issue of 1000 par value, 5.6% bonds that mature in 15 years and pay annual interest will sell for $979.dividends have gro

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd