Assume that you are the CEO of a medium size company in the U.S. Your company is contemplating raising capital by selling debt securities and equity securities. Discuss the advantages and disadvantages if any associated with this plan.© BrainMass Inc. brainmass.com October 24, 2018, 11:51 pm ad1c9bdddf
ADVANTAGES OF DEBT COMPARED TO EQUITY
- Because the lender does not have a claim to equity in the business, debt does not dilute the owner's ownership interest in the company.
- A lender is entitled only to repayment of the agreed-upon principal of the loan plus interest, and has no direct claim on future profits of the business. If the company is successful, the owners reap a larger portion of the rewards than they would if they had sold stock in the company to investors in order to finance the growth.
- Except in the case of variable rate loans, principal and ...
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Advantages and disadvantages of various valuation methods
Describe the advantages and disadvantages of these 3 valuation methods: 1) the Discounted Cash Flow method (fundamental method) 2) the Venture Capital Method and 3) the First Chicago Method. In answering the question, assume that you plan to value a startup.
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