Corporation raises investment in the following three ways:
• Issuing stocks: Firms raise investment through issuing stocks. The stock holders are the owners of the company who receive dividends from the net profit.
• Reinvestment: Stockholders may reinvest the profit in the firm, which is also known as retained income.• Borrowings: Firms can borrow money from the bank for the long-term and for issuing bonds. Bond is the agreement that states that the firm will repay the borrowed amount with the fixed rate of interest at a given period of time.
Cost of payment:
When the prize is disbursed in equal annual installments over 20 years, then the cost of payment can be calculated by using the following formula:
…… (1)• Annual installment is $500,000
• Number of years are 20.
• Interest rate is 10 percent per annum.
Substitute the respective values in Equation (1) to calculate the cost of payment.
Hence, the cost of payment is
Patents place restrictions in markets on an individual's ideas or products. For example, there is a patent on the air-powered pogo stick; this patent prohibits additional United States producers of air-powered pogo sticks. These patents attempt to protect the intellectual creativity and property of producers. In the case with reusable dry cleaning bags, a producer of a polypropylene bag flusters the producer of a cotton bag. In this case, however, a patent on the reusable dry cleaning bag may inhibit progress and leave consumers with only one, less favorable option. If the polypropylene bag were introduced, it would present a cheaper, potentially better product into the market. Thus, consumers would have better options and be better off.