Derek Borrowed 50 000 Mother New Business Venture Promised Would Partner Business Would En Q34223044

Derek borrowed $50,000 from his mother for his new businessventure. He promised that she would be a partner in the businessand would be entitled to a significant percent of profits from thebusiness at the end of the year. This is an example of _____.

Expert Answer

Equity financing.

Equity financing is the ownership interest sale for raising fundin order to operate the business operations. It is not a debt wherefund are borrowed. Here the ownership is sold.   In thisfinancing the shares of the enterprise is sold to raise thecapital. It could be done from friends and families as well. Sothis was an