Business 7115 · O Level · Business finance: needs and sources
Business finance: needs and sources — practice question
APQ is a multinational company. It produces chemicals sold to farmers, helping them raise food output. It intends to build a factory in country X, a developing country with low interest rates. The Finance Director stated: ‘This factory will generate a number of external benefits. APQ is a public limited company that aims to behave ethically towards all of its stakeholders.’ The new factory will cost $100m and APQ will face an opportunity cost. The Finance Director is unsure which source of finance should be chosen for the new factory.
(a)[2]
State what is meant by ‘opportunity cost’.
(b)[2]
Identify two potential external benefits that may result from the new factory.
(c)[4]
Identify and explain two advantages for APQ of operating as a multinational company.
(d)[6]
Identify two stakeholder groups for APQ. Explain how APQ could behave ethically towards each stakeholder group.
(e)[6]
Explain two appropriate sources of finance that APQ could use for the new factory. Recommend which source of finance APQ should choose. Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The next best alternative that is given up” …