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Q. Determine the proportion of debt and equity?
Financing Decision: - This function is related to increasing of finance from different sources. For this reason the financial manager is to determine the proportion of debt and equity. In other sense there are two sources of finance:
(i) Debt:- Debt signifies long term loans and includes:
(ii) Equity: - Equity demotes to shareholder's funds and includes:
Different Cost of Capital with Changed Proportions: It is quite possible that the specific costs of capital of different sources may be affected by the amount of funds' raised and
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