Some people talk about the use of Debt as a source of financing as if it...

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Finance

Some people talk about the use of Debt as a source of financingas if it were evil and should be avoided at all costs. Does thismake sense to you? Under what conditions does it make sense for abusiness to use Debt Capital (in lieu of Equity Capital)?
What are the implications for a company's Weighted Average Costof Capital and Minimum Required Free Cash Flow Return on Assets ifthe company only uses Equity Capital to finance its TotalAssets?
The majority of business owners the Instructor has met do notuse any long-term financial planning process for their company.What would you say are the pros and cons of developing and usinglong-term financial plans for a company?

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Debt financing is capital acquired through the borrowing of funds to be repaid at a later date Common types of debt are loans and credit The benefit of debt financing is that it allows a business to leverage a small amount of money into a much larger sum enabling more rapid growth than might otherwise be possible In addition payments on debt are generally taxdeductible The downside of debt financing is that lenders require the payment of interest meaning the total amount repaid exceeds the initial sum Also payments on debt must be made regardless of business revenue For smaller or newer businesses this can be especially dangerous Conditions that make sense for business to use debt capital 1 How soon do you need financing If you need cash as soon as possible then debt financing is the way to go You can get business loans incredibly fast in a matter of See Answer

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Some people talk about the use of Debt as a source of financingas if it were evil and should be avoided at all costs. Does thismake sense to you? Under what conditions does it make sense for abusiness to use Debt Capital (in lieu of Equity Capital)?What are the implications for a company's Weighted Average Costof Capital and Minimum Required Free Cash Flow Return on Assets ifthe company only uses Equity Capital to finance its TotalAssets?The majority of business owners the Instructor has met do notuse any long-term financial planning process for their company.What would you say are the pros and cons of developing and usinglong-term financial plans for a company?