Final answer:
Choosing between issuing stock and borrowing when expanding a bike repair store involves assessing the potential for new capital, the impact on ownership and profit distribution, and the implications for financial control and repayment obligations.
Step-by-step explanation:
When considering whether to raise funds through issuing stock or borrowing for a major expansion, there are several factors to consider. Issuing stock can be a way to raise capital without incurring debt, and it brings in shareholders who may contribute different skills or networking opportunities to the business. This option may provide a surge of financial capital more significantly than a loan.
However, it also means sharing ownership and profits with others. On the other hand, borrowing funds through a loan may be faster and allows the owner to retain full control of the company, but it also means committing to fixed repayments regardless of business performance and potentially higher long-term costs if interest rates are unfavorable. Each option has its benefits and risks that should be critically assessed in relation to the bike repair store's long-term strategic goals and financial health.