If a firm wants to finance a new project, it can obtain financing by
A) issuing and selling new shares of stock.
B) selling corporate bonds to the public.
C) using its retained earnings.
D) all of the above

Question

Quizplus · Accepted Answer

A firm can obtain financing for a new project by issuing and selling new shares of stock, selling corporate bonds to the public, and using its retained earnings. Issuing new shares of stock is an option for companies that want to raise capital, but it dilutes existing shareholders' ownership. Selling corporate bonds involves borrowing money from investors who earn interest on their investment. Finally, a company can use its retained earnings, which are its profits from previous years, to fund its new projects. Each financing option has its benefits and drawbacks, and a firm should consider all options before making a decision.

If a Firm Wants to Finance a New Project, It