Financial and Strategic Management Essay Example | Topics and Well Written Essays - 500 words

Financial and Strategic Management - Essay Example Firms that are highly leveraged may not continue to pursue debt financing because they are already paying a lot of interest. One of the cons of debt financing is the payment of interest. A positive aspect of debt financing is that the firm does not relinquish any control (Richards, 2011). The use of equity financing can be used to raise money fast. One of the advantages of equity financing is that firm is not obligated to pay back the principal and there are no interests costs associated with the acquisition of money through equity financing. A con of the strategy is that the common stocks sold in the open market by public corporations have voting rights which dilutes the power of ownership. There is no single formula to determine the appropriate mix for a particular project. The mix that will be used by a company will depend on a variety of internal and external factors. For instance when the interest rates in the market are low companies are going to be more persuaded to increase t he use of debt to finance projects. 2) Identify 3-5 sources of funding for projects. You may include budget allocations directly from governments or private sources of finance. What are their relative advantages and disadvantages? There are many sources that can be used to finance a project. Five of those sources are common stocks, preferred stocks, bonds, governmental incentives, and retained earnings.