Derek borrowed $50,000 from his mother for his new business venture.He promised that she would be a partner in the business and would be entitled to a significant percent of profits from the business at the end of the year.This is an example of _____.

Question

Quizplus · Accepted Answer

This is an example of equity financing because Derek is offering a share of his business (in the form of a significant percent of profits) in exchange for the capital his mother provides. Equity financing involves raising capital through the sale of shares in a business.

Derek Borrowed $50,000 from His Mother for His New Business