Final answer:
Raising equity internally allows a firm to avoid the obligation of making interest payments, which is financially beneficial if the firm has inconsistent or insufficient income.
Step-by-step explanation:
An important advantage to a firm raising equity internally is not having to pay interest. When a firm chooses to raise capital, it has several options, such as borrowing from a bank, issuing bonds, or issuing stock. Borrowing money or issuing bonds requires the firm to make scheduled interest payments, which can be burdensome especially if the firm does not have sufficient income. However, raising equity by issuing stock means that the firm isn't obligated to make regular payments, though it may opt to pay dividends at its discretion.