Purchase Solution

Financing alternatives

Not what you're looking for?

Ask Custom Question

My company is a multi-billion dollar public company that must locate 500 m in external financing for a proposed acquisition. All funds will be scured in the US. Please provide a detailed presentation of the characteristics of the various external financing alternatives, including the advantages and disadvantages of each. A recommendation must be made of which alternative or combination of alternatives should be used to finance the overseas investment.

Purchase this Solution
Solution Summary

Please provide a detailed presentation of the characteristics of the various external financing alternatives, including the advantages and disadvantages of each.

Solution Preview

There are various financing routes available for Acme to invest in its expansion plans in India. For our analysis, since funds will be secured in the US only, we are ignoring alternative financing schemes available in the foreign country such as special grants provided by development banks to set up operations in these countries.

Let us discuss these options, their merits and demerits one by one:

1) Fund Raising via IPO/ Public issue: One of the most common routes to raise funds for these expansion plans is to offer shares of the company to public via Initial Public Offer, if the company is not publicly held right now or via issue of additional shares or rights issue, if the company is already publicly traded. The major advantage of going to the stock markets to raise funds is that substantial amount of funds can be raised via this route by diluting the equity of the company in proportionate amount. Further, the cost of raising funds via this route is cheaper as well due to no obligation to pay interest on capital as investors become shareholders of the company and not lenders. IPO's are especially attractive for new projects when there is optimism in the economy and ...

Solution provided by:
Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
Recent Feedback
  • "Thank you. "
  • "Thank you"
  • "Thank you. I got 20/20 last week for my discussion you help me out with."
  • "Thank you. Great Job. "
  • "Thank you. Great Job. "
Purchase this Solution
Free BrainMass Quizzes
SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Operations Management

This quiz tests a student's knowledge about Operations Management

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

View More Free Quizzes
Related BrainMass Solutions

  • Acme, a multibillion dollar public MNE that is incorporated in the U.S.

    This solution provides a detailed presentation of the characteristics of the various external financing alternatives of each business.

  • Financing and entrepreneurship

    538864 Financing and entrepreneurship Utilizing references, please help me explain the following 1. The steps taken to determine which financing alternatives to pursue. 2. The advantages and disadvantages of: a. Corporate venture capital b.

  • Business Management: Evaluating Performance

    This solution provides a detailed presentation of the characteristics of the various external financing alternatives, including the advantages and disadvantages of each for a given organization.

  • Common equity/debt equity financing

    189303 Common equity/debt equity financing Moon and Chittenden are considering a new internet venture to sell used textbooks. The project requires $300,000 in financing. Two alternatives have been proposed: Plan 1 (Common equity financing).

  • Stephens Security has two financing alternatives

    246927 Stephens Security has two financing alternatives A2. (Comparing borrowing costs) Stephens Security has two financing alternatives: (1) A publicly placed $50 million bond issue.

  • A Discussion On EBIT-EPS Calculations

    The project requires $300,000 in financing. Two alternatives have been proposed. Plan 1 (Common equity financing). Sell 30, 000 shares of stock at a net price of $10 per share. Plan 2 (Debt equity financing).

  • After-Tax Cost of Financing

    Calculate the after-tax costs of financing with each of the following alternatives.

  • Cost of Bank Loans

    119778 Cost of Bank Loans: evaluating alternatives UFSU Corporation intends to borrow $450,000 to support its short-term financing requirements during the next year.

  • Comparing borrowing costs - Stephens Security

    The solution compares borrowing cost for Stephens Security who have two financing alternatives.

  • International Finance

    Provide a DETAILED PRESENTATION of the characteristics of the various financing alternatives, including the advantages and disadvantages of each.

View More Related Solutions