Fundamental elements of business Essay Example | Topics and Well Written Essays - 500 words

Fundamental elements of business - Essay ExampleCost of equity does non necessarily involve repayment of funds raised unlike debt. It basically involves rising of funds through interests which not mount pressures on the organization. More articulate is the fact that monetary value of equity gives the business organization a sense of expression which allows the organization room to go to all ends to acquire funds. They are not restricted by debt or anything.If a company is successful, the higher the cost of equity which will definitely leave the company little. There is no stipulated cost of equity it therefore depends on the interest rate which renders the company rather helpless. In this case the cost of equity of a company puts the organization in the position of continuously requiring votes from shareholders before taking certain decisionswise use of debt may lower a firms weighted average cost of capital (WACC) during ostentatiousness debt is repaid with cheap dollars. In thi s case raising debt capital is easier and less complicated because the company is not required to comply with state, federal securitys laws and regulations.Interest and principal must always be met when due regardless of a firms financial position, also poor u