Which of the following statements regarding how a firm should finance its cash needs is true?
A) Permanent working capital should be financed by long-term sources of funds, while temporary working capital should be financed by short-term sources of funds.
B) Permanent working capital should be financed by short-term sources of funds, while temporary working capital should be financed by long-term sources of funds.
C) Both permanent working capital and temporary working capital should be financed by short-term sources of funds.
D) Both permanent working capital and temporary working capital should be financed by long-term sources of funds.
E) Permanent working capital should be financed by long-term sources of funds, while temporary working capital should only be paid for with cash.
Correct Answer:
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