Which factor should be taken into account when deciding between debt and equity finance?

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Quizplus · Accepted Answer

All of the above factors should be taken into account when deciding between debt and equity finance. The security available is important as it determines the level of risk associated with the finance, while the purpose of the finance will inform the decision on whether debt or equity is more appropriate. The effect on earnings per share is also a crucial consideration, as investors will often judge the attractiveness of a company based on this metric. Therefore, considering all of these factors will help make the best choice between debt and equity finance.

Which Factor Should Be Taken into Account When Deciding Between