Lenders of fixed capital expect the assets purchased to increase the borrowing firm's efficiency,profitability,and cash flows.

Question

Quizplus · Accepted Answer

Lenders of fixed capital expect the assets purchased to have a positive impact on the borrowing firm's operations, resulting in increased efficiency, profitability, and cash flows. This is because the purpose of borrowing fixed capital is to finance long-term investments in assets that will generate returns for the firm over a significant period of time. Lenders expect to be repaid with interest over the life of the investment, and therefore have a vested interest in ensuring that the funds are used in a way that will benefit the borrowing firm.

Lenders of Fixed Capital Expect the Assets Purchased to Increase