Final answer:
Cain Industries engages in debt financing by taking out a $10 million loan from a bank, which provides capital without diluting ownership but requires regular interest payments.
Step-by-step explanation:
By borrowing $10 million from the First Newfoundland Bank, Cain Industries utilizes debt financing. Debt financing means the company has taken a loan on which it must make scheduled interest payments, irrespective of its current income.
Different from equity financing, debt financing allows the firm to maintain full control over its operations without being answerable to shareholders, as would be the case if it issued stock. On the opposite side, issuing stock (equity financing) involves selling ownership of the company to the public and is often a method employed when a firm wishes to avoid debt or can't access a bank loan but needs capital.