Additional options of where it is sourcing funds are from partnerships, client advance payments and vending. The firm also relies heavily on any of the funds that they have generated, second mortgages and credit cards (Krueger, 2002).
The firm intends to use the start up funds to cover build out costs, purchase the necessary equipment and software and also to cover the facility. Initial costs of operating will also be covered by the funds, that is, taxes, payroll and utilities. The firm intends to spend forty five percent of the funds on assets so that the remaining fifty five percent could be spent on operations until it starts to make profits.
The new business venture tends to accept government grants or guarantees as part of the capital structure because it will receive huge monetary rewards from it which will be in millions of dollars. The venture will also find it easier to raise more money from other government and private sectors once it receives government grants. It will therefore have high chances of being prestigious, getting instant credibility and also gaining public exposure as noted by Krueger (2002).
Government grants do no have to be paid back and when the venture accepts them it means that the government will have already done research on the necessary activities that will ensure satisfaction of the public needs. This may mean that the venture will have ready customers because of the great demand for its services and products.
Ratio of depth to equity measures the amount of money that a venture should borrow safely over a long time period. This is done by comparing the total debts of the venture and dividing it by the total amount of owner’s equity. The result is the total percent of what the firm is indebted. In the initial capital structure of the venture, equity consisted of both the common and preferred stock and also