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Although there are many differing methods to raise financial capital, generally speaking, financing instruments fall into one of two categories: debt or equity (Securities Law, p. 1, 2008).
Both debt and equity represent opportunities to increase capital and provide a means for business expansion, each instrument has particular advantages and setback that must be successfully managed in order to achieve the firm’s desired result of maximized wealth through growth. One important item to consider when examining methods for raising capital involves the, “dilution of ownership that occurs by using equity instruments versus the obligation to repay which comes with the use of debt instruments” (Evans, p...
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