Solution-Most firms use equity financing to acquire assets

Most firms use equity financing to acquire assets

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Reference no: EM133263423

Most firms use equity financing to acquire assets. Debt Financing are the lengthy term financial loans normally are due within 3 to 7 years but can be stretched to 15 or 20 years. A huge benefit is that the advances are tax deductible. The loan contract can be in two distinct documents which are a promissory note that requires the debtor to reimburse the loan in specified installments. Another is a term-loan agreement. A secured bond that is issued with some form of collateral, such as real estate. An unsecured bond that is financed only by the reputation of the issuer. The organization raising needed funds through borrowing to increase the firm's percentage of the return.

Versus equity there are the 3 potential ways to obtain equity financing which are selling stocks, from protected earnings, from venture capital. The cost of capital is the rate of return a company must earn to meet the demands of its lenders and expectations of its equity holders.

The loan I would utilize would be the Debt Financing loan since the loan interest is tax deductible. The unsecure bond would be beneficial by being financed only by my character.

Reference no: EM133263423

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Most firms use equity financing to acquire assets

Reference no: EM133263423

Reference no: EM133263423

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