04 Identify and explain two factors (other than interest rates) that CLG should consider when........[6]

[BASEL Moderator]

Identify and explain two factors (other than interest rates) that CLG should consider when choosing a source of finance to pay for the expansion.CLG owns six airports in country L. The directors want to expand its main airport by building another runway for aircraft to take off and land. It will cost $300m. Choosing an appropriate source of finance will be important. The Managing Director said: ‘CLG could offer 50 extra flights a day. There are environmental pressures including the loss of green spaces and extra pollution. There will be external benefits as well. I hope the Government allows the new runway to be built.’ Interest rates increased in 2017.

SOURCE OF FINANCE.JPG (14.3 KiB) Viewed 165 times

04 Identify and explain two factors (other than interest rates) that CLG should consider when choosing a source
of finance to pay for the expansion. [6]

Possible KN Points:
• Amount
• Time span =
• Current level of debt
• Type of organization
• Security
• Credit history OR financial status
• Purpose of loan