EXAM CORNERINTRO ACTIVITY


2023 Q17 (c) (i) Cupán Eco Ltd want to build a large extension to their premises.


Recommend a suitable source of finance that Cupán Eco Ltd could use to fund the expansion. Give a reason for your answer. Source (2m)


Reason (4m)


Long-term loan Grant


Sell Shares Reserves


They have a premises that could be used as collateral / they have to pay interest but do not give away any ownership of the business.


A grant doesn’t have to be repaid but comes with conditions. They would not have to pay interest or have set repayments. They would not have to pay interest or have set repayments.


You should be specific and state ‘long-term loan’ or ‘medium-term loan’ when referencing a loan, you shouldn’t just say ‘loan’ or ‘term loan’.


TOP TIP EXAM CORNERINTRO ACTIVITY 2022 Q17 (c) (ii)


Cadden Ltd are applying for a grant from the Sustainable Energy Authority of Ireland (SEAI) to help fund the Solar Panels. Explain the term grant.


A grant is a sum of money given to an individual or business that does not have to be repaid but comes with specific conditions. The Local Enterprise Office gives grants to new Irish start-ups.


CLASS ACTIVITYINTRO ACTIVITY Key Skill: Recommend a suitable source of finance and justify the choice


Read each statement and decide whether it is True or False. 1. A bank overdraft is a suitable source of finance for buying new premises. 2. A business that uses hire purchase owns the asset from the first payment. 3. A grant does not have to be repaid as long as it is used for its intended purpose. 4. Trade credit allows a business to receive stock now and pay for it at a later date. 5. Selling shares means the business must pay interest to shareholders each month. 6. A long-term loan may require a business to provide collateral as security.


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STRAND 2 CHAPTER 24: Sources of finance and the cash flow budget


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