Choose all that apply. Which of the following would be considered good reasons for a business to borrow money?

Question

Responses

To repay information sources of funds used before.
To repay information sources of funds used before.

To purchase assets.
To purchase assets.

To buy back equity in the company.
To buy back equity in the company.

To pay off the owners home mortgage.

Answer 1

The following options would be considered good reasons for a business to borrow money:

1. To purchase assets. - Borrowing money to invest in assets such as equipment, property, or technology can generate future income and growth.

2. To buy back equity in the company. - This can strengthen the company’s financial position or improve ownership structure.

The following options are generally not considered good reasons for a business to borrow money:

1. To repay information sources of funds used before. - This may imply refinancing rather than productive investment, which is not typically a strong reason for borrowing.

2. To pay off the owners home mortgage. - This is a personal expense and typically not a valid business reason for borrowing business funds.

So, the applicable reasons are "To purchase assets" and "To buy back equity in the company."