Newot Texin, a pharmaceutical company, introduces a new pain relieving drug in the market. It borrows $1 million from Esterotia, a private bank, to market the drug. In return, Esterotia allows Newot Texin to return the full amount with interest in fixed amounts of $200,000 every six months. Which of the following sources of long-term funds is being used by Newot Texin in the given scenario?

Question

Quizplus · Accepted Answer

Newot Texin is using a term loan, which is a loan from a bank with a specified repayment schedule and a fixed or floating interest rate. The fixed repayment amounts of $200,000 every six months indicate a structured term loan agreement.

Newot Texin, a Pharmaceutical Company, Introduces a New Pain Relieving