Firms typically finance long-term assets, particularly property, plant, and equipment, with long-term borrowing or funds provided directly or indirectly by shareholders.

Question

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Firms usually opt for long-term borrowing or issuance of equity shares to finance the acquisition of long-term assets, such as property, plant, and equipment. Short-term financing sources like trade credit or commercial paper are typically not used for this purpose.

Firms Typically Finance Long-Term Assets, Particularly Property, Plant, and Equipment