ENTREPRENEURIAL FINANCE
SOURCES OF FUNDING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Wishes to pay for an asset in instalments
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Wishes to change its legal structure
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Wants to own the asset straight away
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Wishes to upgrade assets on a regular basis
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Detailed explanation-1: -In hire purchase system the last installment payable by buyer includes the cash price of installment and interest . The hire purchase act was passed in the year 1972 and looks after every hire purchase agreement.
Detailed explanation-2: -It is defined by the equation Monthly payment = P (r(1+r)^n)/((1+r)^n-1). The other methods listed also use EMI to calculate the monthly payment.
Detailed explanation-3: -However, there can be a difference between the two: With some installment plans, the buyer gets the ownership rights as soon as the contract is signed with the seller. With hire purchase agreements, the ownership of the merchandise is not officially transferred to the buyer until all the payments have been made.