The financing options that are available to the company are equity and debt. Equity Financing refers to the issue of equity shares to the public. Debt refers to the loan taken by the company from the public or any financial institutions. The equity shareholders have the right to vote in general meetings while the debt holder does not have any such rights.

The equity shareholders are also entitled to receive dividends while debt holders are entitled to receive the interest regardless of whether the company is having a profit or not. The interest paid to debt-holders is deducted from the net profit before any tax is charged. The interest reduces the taxable income while the dividend is calculated on net profit after tax. Thus, the cost of using debt finance is lower as the amount which is paid as the interest is charged against the tax.

<u>Therefore, Equity financing involves a higher cost than Debt financing. </u>

Learn more:

1. Learn more about raising the equity

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2. Learn more about the problem related to equity theory

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3. Learn more about the short-term financial goals

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Answer details:

Grade: Senior School

Subject: Financial Management

Chapter: Cost of Capital

Keywords: Equity financing, the highest overall cost, debt financing, financing options, capital, business, shareholder’s fund, loan, financial management, raise, issue.

4 0

3 years ago

Read 2 more answers

Marketing goods and services to the B2B market relies more heavily on advertising than marketing efforts aimed toward the consum

morpeh [17]

This statement "Marketing goods and services to the B2B market relies heavily on advertising than marketing efforts aimed toward the consumer market" is:True.

<h3>What is B2B marketing?</h3>

B2B marketing which full meaning is business to business marketing can be defined as the process in which business owners tend to focus on selling their products or goods to other businesses rather than their customers.

Based on this, companies or business owners prefers to advertise their goods and service to other business owners so as to make profit or generate revenue.

Inconclusion the statement is true.

Learn more about B2B marketing here:brainly.com/question/26506080

4 0

3 years ago

Coleman Company owns a machine that produces a component for the products the company makes and sells. The company uses 1,800 un

Sholpan [36]

Answer:

Difference=$1,800

This shows if Coleman buys, the net income will decrease by $1,800. So Coleman should make components.

Explanation:

Given Data:

Direct material=$7

Variable manufacturing overhead=$6

Direct labor=$4

Fixed manufacturing overhead=$5

Required:

Should Coleman make or buy the component?

Solution:

Total Variable cost=Direct material+Variable manufacturing overhead+Direct labor

Total Variable cost=$7+$6+$4

Total Variable cost=$17

Cost From making=Units*Total Variable cost

Cost From making=1800*$17

Cost From making=$30,600

Supplier Price=$18

Cost From Buying=1800*$18

Cost From Buying=$32,400

Difference=Cost From Buying-Cost From making

Difference=$32,400-$30,600

Difference=$1,800

This shows if Coleman buys, the net income will decrease by $1,800. So Coleman should make components.

7 0

4 years ago

You have purchased a new mattress for $2,000, and the store has given you a "12 months, same as cash" deal. this means that you

egoroff_w [7]

the answer would be $2,000.00 because that is what your going to owe in a year you are getting one year interest free

4 0

3 years ago