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Question one Institutions require capital funds to start a new business or to finance a...

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Finance

Question one

Institutions require capital funds to start a new business or to finance a particular business project. The funds are not free but come at a cost - Cost of Capital. Companies and investors have four forms of capital options for their investment needs. Other investments are acquired through mergers and acquisition, others through venture capital financing while some other investors would prefer leasing finance. Cost of Capital. Companies and investors have four forms of capital options for their investment needs. Other investments are acquired through mergers and acquisition, others through venture capital financing while some other investors would prefer leasing finance.

  1. Describe two forms of venture capital financing used to invest in project of an ambitious nature. (10 marks)
  2. Outline the forms of capital combinations available to merchant and or investment bankers? (5 marks)
  3. Explain what is meant by cost of capital and its significance to investors. (5 marks)
  4. In your view, why do some investors prefer to acquire an established company than to start-up a new company altogether. (5marks)

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