Question

If you are a manager of a large cereal producer. You have been asked to raise a substantial amount capital to build a new plant. What would influence the sources of finance you would choose ?

Answer 1

If owning a small firm needing financial capital for expansion, it is preferable to raise funds through issuing stock rather than borrowing. Issuing stock avoids debt and can attract knowledgeable investors.

Step-by-step explanation:

If I owned a small firm that had become somewhat established and needed a surge of financial capital to carry out a major expansion, I would prefer to raise the funds through issuing stock rather than borrowing. Issuing stock allows the firm to raise capital without taking on additional debt, which can be beneficial for long-term financial stability. Additionally, issuing stock gives the firm the potential to attract knowledgeable investors who can provide expertise and guidance.