Final answer:
The two internal sources of equity finance for companies are reinvestment of profits and owner's capital contributions, where profits from the business are reinvested and owners provide additional personal funds.
Step-by-step explanation:
The question asks to identify and outline the two internal sources of equity finance. In the context of the U.S. economy, we consider private savings and public savings as two main sources for financial capital. However, when it comes to internal sources of equity finance specifically for companies, the two primary sources are: Reinvestment of Profits: Companies that earn profits can choose to reinvest a portion of those profits back into the business. This reinvestment can be allocated to equipment, structures, research and development, and more. This is a typical source of equity finance for established companies with sufficient profits. Owner's Capital Contributions: Owners of a business can also invest additional funds from their private savings into the company.
This raises the business's equity and can provide financial resources without raising debt or diluting ownership through issuing new shares to outside investors.These internal sources are fundamental for businesses looking to finance their operations or growth strategies in a way that maintains control within the current ownership structure.