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A sole trader invests $500 000 into her business - HSC - SSCE Business Studies - Question 6 - 2017 - Paper 1
Question 6
A sole trader invests $500 000 into her business. What is this an example of? A. An overdraft B. Retained profits C. Internal debt finance D. Internal equity finance
Worked Solution & Example Answer:A sole trader invests $500 000 into her business - HSC - SSCE Business Studies - Question 6 - 2017 - Paper 1
Step 1
What is this an example of?
Answer
The scenario describes a sole trader investing personal funds into her business, which categorically classifies this type of investment as 'Internal equity finance'. This refers to the capital that is generated from the owner's personal savings or investments in the business, contrasting with external funding sources like loans or mortgages. Therefore, the correct answer is:
D. Internal equity finance.