BUSI603 DB Response 4a

BUSI603 DB Response 4a - DB Response 4a While I would agree...

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DB Response 4a While I would agree that the financial managers of the diner should have the final say in determining the appropriate mix of debt or equity financing, I would also encourage the financing to be at least moderately weighted toward the equity end of the scale. Cheng (2009) would argue that, “it is dangerous for firms, as far as their subsequent performance is concerned, to rely or depend entirely on either debt or equity for raising capital, it is much safer—and better in many respects—to raise finance by both methods, with each working together, at the same time” (p. 145). Also, the bonds of unpredictability are loosened—not broken, of course—when a company does not rely heavily upon debt financing. A company can only rely on the consistency of the current conditions of the stock market and the interest rates at present. This would also be a case in favor of equity-heavy financing. When considering the $10,000,000 need for the diner, one should certainly hesitate at using debt financing, but
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BUSI603 DB Response 4a - DB Response 4a While I would agree...

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