Description
Assignment Instructions
Action Items
Party A graduated from business school and has learned the details about running a successful business. He is ready to utilize his education and does not want to work for anyone. Party A had decided to sell the fifty thousand rulers that his Uncle gave him. He knows that he will have to purchase additional supplies.
You are his business advisor, and he wants to know how he can raise the money to finance his business and if he should take out a loan.
Discuss the two main ways that corporations are financed? 400 answer
Case Study
Party A graduated from business school and has learned the details about running a successful business.
He is ready to utilize his education and does not want to work for anyone. Party A had decided to sell
the fifty thousand rulers that his Uncle gave him. He knows that he will have to purchase additional
supplies. You are his business advisor, and he wants to know how he can raise the money to finance his
business and if he should take out a loan.
Discuss the two main ways that corporations are financed?
Party A requires additional capital to finance his rulers business in order for it to be
successful and avoid employment by another person.
Debt and equity financing are two possible sources of funding for party A. Debt
financing includes secured and unsecured loans, while equity finances include sale of common
and preferred shares to potential investors.
The student desires to use debt financing to help get adequate funds within a short
period to boost the business. The first reason for advocating for debt financing is that it helps
the student retain the control of the business because it does not require the admission of
another party. Secondly, debt finance has a tax advantage since the interest paid on loans is tax
deductible, thus reducing the tax burden. Thirdly, it helps with easy planning because the
student knows when and how much to pay the principal and the interest. The fourth benefit is
that debt financing helps build business credit for large loans in the future (Kuligowski, 2019).
Lastly, long-term debt helps reduce the cost of debt, thus boosting business growth.
The disadvantage of debt financing is that it has qualification requirements since not all
people qualify for the loan they need. Second, using collateral may put some of the company’s
assets at risk in the event of a default. Lastly, most debts are expensive and may reduce the
organization’s cash inflows (Kuligowski, 2019).
Eules
SEU | ELITE LAW401
The student should examine the financial need and consider a loan from a financial
organization that is less expensive to boost the business.
References
Kuligowski, K. (2019, December 19). Debt vs. equity financing: What’s best for your SMB? –
businessnewsdaily.com. Business News
Daily. 401 Case Study
Assignment Instructions
Action Items
Party A graduated from business school and has learned the details about running a
successful business. He is ready to utilize his education and does not want to work for
anyone. Party A had decided to sell the fifty thousand rulers that his Uncle gave him. He
knows that he will have to purchase additional supplies.
You are his business advisor, and he wants to know how he can raise the money to finance
his business and if he should take out a loan.
Discuss the two main ways that corporations are financed?
Purchase answer to see full
attachment
Party A graduated from business school and has learned the details about running a successful business.
He is ready to utilize his education and does not want to work for anyone. Party A had decided to sell
the fifty thousand rulers that his Uncle gave him. He knows that he will have to purchase additional
supplies. You are his business advisor, and he wants to know how he can raise the money to finance his
business and if he should take out a loan.
Discuss the two main ways that corporations are financed?
Party A requires additional capital to finance his rulers business in order for it to be
successful and avoid employment by another person.
Debt and equity financing are two possible sources of funding for party A. Debt
financing includes secured and unsecured loans, while equity finances include sale of common
and preferred shares to potential investors.
The student desires to use debt financing to help get adequate funds within a short
period to boost the business. The first reason for advocating for debt financing is that it helps
the student retain the control of the business because it does not require the admission of
another party. Secondly, debt finance has a tax advantage since the interest paid on loans is tax
deductible, thus reducing the tax burden. Thirdly, it helps with easy planning because the
student knows when and how much to pay the principal and the interest. The fourth benefit is
that debt financing helps build business credit for large loans in the future (Kuligowski, 2019).
Lastly, long-term debt helps reduce the cost of debt, thus boosting business growth.
The disadvantage of debt financing is that it has qualification requirements since not all
people qualify for the loan they need. Second, using collateral may put some of the company’s
assets at risk in the event of a default. Lastly, most debts are expensive and may reduce the
organization’s cash inflows (Kuligowski, 2019).
Eules
SEU | ELITE LAW401
The student should examine the financial need and consider a loan from a financial
organization that is less expensive to boost the business.
References
Kuligowski, K. (2019, December 19). Debt vs. equity financing: What’s best for your SMB? –
businessnewsdaily.com. Business News
Daily. 401 Case Study
Assignment Instructions
Action Items
Party A graduated from business school and has learned the details about running a
successful business. He is ready to utilize his education and does not want to work for
anyone. Party A had decided to sell the fifty thousand rulers that his Uncle gave him. He
knows that he will have to purchase additional supplies.
You are his business advisor, and he wants to know how he can raise the money to finance
his business and if he should take out a loan.
Discuss the two main ways that corporations are financed?
Purchase answer to see full
attachment
