Question

After graduating from college, Joseph Tantillo decided to start a retail Web site that specializes in personalized Greek apparel. To fund his Web site, he borrowed money from his parents (who expect to be repaid with interest). In other words, he used _____ financing.

Answer 1

Answer:

Debt financing

Explanation:

Debt financing is defined as borrowing that a company undertakes to finance it's operations by selling of debt instruments to investors.

The debt instrument attracts interest payment.

Examples of debt financing includes bank loans, loans from friends and family, and government backed loans.

In the given scenario Joseph Tantillo decided to borrow money from his parents to start a retail Web site that specializes in personalized Greek apparel. This is debt financing

In contrast equity financing involves sale of shares to obtain capital