Your company is now wishing to undertake a new project.  What are the issues to be considered when considering the use of debt vs. equity financing of this new project?  Of these two types of capital which will have the most impact on earnings per share for your company? (add at least one reference please)

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Asked Apr 22, 2019
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Your company is now wishing to undertake a new project.  What are the issues to be considered when considering the use of debt vs. equity financing of this new project?  Of these two types of capital which will have the most impact on earnings per share for your company? (add at least one reference please)

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Expert Answer

Step 1

When looking into which way we should finance a new project for the company we really need to look at what our company essentially handle and whether or not we are willing to give a piece of our company in order to finance the project.

If the company are going through equity financing for the project. Equity financing is costlier for the company because equity financers demand higher return for the investment. Equity financers demand higher return because project involve higher risk. After that, the company shall hav...

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