Debt and equity There are ii basic ways of finance for a commercial enterprise: Debt financing and equity financing. Debt financing is defined as borrowing money that is to be repaid over a period of time, usually with interest. The lender does not gain some(prenominal) ownership in the business that is borrowing. Equity financing is set forth as "an exchange of money for a share of business ownership. This form of financing allows the business to obtain funds without having to satisfy a specific amount of money at whatsoever particular time. There are also a hardly a(prenominal) different instruments that could be defined as either debt or equity.
One such instrument is stock options that an employee can maintain after so many years with the company. Either victimisation the debt or equity method, or a combination of the two methods can be intentiond to account for stock options or other instruments with the similar characteristics. There are pros and cons to deciding to use either of these methods. First I will discuss the pros of usin...If you regard to get a full essay, order it on our website:
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