When considering how to finance the acquisition of an asset, which of the follow

Question

When considering how to finance the acquisition of an asset, which of the following statements is true? A) The amount borrowed should be larger than the cost of the assets acquired. B) The cash flows generated by the assets should dictate the type of note (noninterest bearing, installment, etc) the company uses to finance the asset. C) The cash flow required by the type of note used should dictate the type of asset acquired. D) In order to minimize debt the company should not borrow unless there is no cash to fund the acquisition of the asset.

Explanation / Answer

Option B ) answer

The cash flows generated by the assets should dictate the type of note (noninterest bearing, installment, etc) the company uses to finance the asset.

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