Social Sciences, asked by arnelb327, 3 months ago

why do firms invest and borrow​

Answers

Answered by vermanushka7487
7

Answer:

They use the funds to generate enough profits to more than cover the cost of borrowing. Taking out credit, whether it's a business loan, invoice finance or an overdraft, allows them to invest in more sales, creating more profit.

Answered by sureshpatnala
9

Answer:

Firms should borrow a lot to finance their investment schedules, because interest payable on borrowings is tax deductible. ... When a firm's investment schedule collapses by failing to generate adequate cash to make compulsory interest payments, shareholders may be forced to suffer the costs and delays of liquidation.

Explanation:

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