A firm can fund an expansion of its operations by

Question

Quizplus · Accepted Answer

Issuing bonds allows a firm to borrow money from the investors and pay them back with interest at a later date. This can be a good option for funding expansion as it does not dilute ownership, and the interest on bonds is tax-deductible. Buying stock, paying dividends, and loaning money may not be the best choices for funding expansion, as buying stock would dilute ownership, paying dividends reduces the firm's cash reserves, and loaning money involves paying interest and principal amounts that add to the firm's cost of capital.

A Firm Can Fund an Expansion of Its Operations by