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Unformatted text preview: 5) too much debt restricts future fund raising EQUITY FINANCING : money received in exchange for a share of ownership Advantages : 1) business is not obligated to repay monies (even in cases of bankruptcy) 2) involvement of high-profile investors can assist in managing the firm & may increase credibility of a new venture 3) more cash available to the new venture b/c there are no debt payments 4) business assets do not have to be pledged as collateral Disadvantages : 1) dilution of ownership interest 2) less (or loss of) control due to sharing of ownership 3) loss of future profits. 4) dividend payments in C-Corporations are not tax deductible Sources: http://biztaxlaw.about.com/od/financingyourbusiness/a/debtvsequity.htm http://smallbusiness.findlaw.com/banking_financing/source/business_events/be1_5debtvs equity http://www.bookrags.com/research/debt-vs-equity-financing-eom/...
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This note was uploaded on 03/28/2011 for the course MNGT 305 taught by Professor Chadwick during the Spring '11 term at Nicholls State.
- Spring '11