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Unformatted text preview: 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 venturevalue added 3. More cash available to the new venture because 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 profitsportion of profits paid to equity investors 4. Dividend payments may not be tax deductible (e.g. C-Corporations) Sources: http://biztaxlaw.about.com/od/financingyourbusiness/a/debtvsequity.htm http://smallbusiness.findlaw.com/banking_financing/source/business_events/be1_5debtvsequity http://www.bookrags.com/research/debt-vs-equity-financing-eom/...
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This note was uploaded on 06/12/2011 for the course MNGT 305 taught by Professor Chadwick during the Spring '11 term at Nicholls State.
- Spring '11