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SOLAS Ltd is considering purchasing a new electric or hybrid sales vehicle - Junior Cycle Business Studies - Question 9 - 2019

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Question 9

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SOLAS Ltd is considering purchasing a new electric or hybrid sales vehicle. (a) Tick (✓) the most suitable source of finance that might be used to purchase this veh... show full transcript

Worked Solution & Example Answer:SOLAS Ltd is considering purchasing a new electric or hybrid sales vehicle - Junior Cycle Business Studies - Question 9 - 2019

Step 1

Tick the most suitable source of finance

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Answer

The most suitable source of finance to purchase the vehicle is Medium Term.

This choice is appropriate as it allows the company to finance the vehicle over a manageable repayment period, typically around 3 to 5 years.

Step 2

State one reason for your choice

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Answer

The loan will be paid back within 5 years. This generally results in lower interest rates on repayments compared to using a credit card, making it a more financially prudent choice for the company.

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