I’m working on a law question and need an explanation and answer to help me learn.
Party A graduated from business school and has learned the details about running a successful business. He is ready to utilize his education and does not want to work for anyone. Party A had decided to sell the fifty thousand rulers that his Uncle gave him. He knows that he will have to purchase additional supplies.
You are his business advisor, and he wants to know how he can raise the money to finance his business and if he should take out a loan.
Discuss the two main ways that corporations are financed?
There are two primary ways that corporations are financed: through equity financing and through debt financing. Equity financing is when the corporation sells shares of ownership in the company to investors in exchange for capital. This is typically done through an initial public offering (IPO). Debt financing is when the corporation takes out loans from lenders in order to raise capital. The corporation then repays the loans, with interest, over time.
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