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Crispo is a public  limited company who deals in Chips manufacturing from 2019. The stockholders of the Crispo public limited want to expand their business by diversifying their snacks range. In this regards they require more capital almost of Rs. 10 million.  But they are new in the market and they have no idea either their new snack range will be successful or not and will make profit for the company or not. Now in this situation, they have only two options in order to raise their capital either they can lend loan of Rs. 10 million from the ABC bank or they can issue of their company shares of worth Rs. 10 million with the help of equity market.

Requirement:

By keeping in view the above provided situation you need to discuss that which option is feasible for Crispo Public Ltd to raise their capital and why?

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FIN 630 GDB                     Solution

Crispo is a public  limited company who deals in Chips manufacturing from 2019. The stockholders of the Crispo public limited want to expand their business by diversifying their snacks range. In this regards they require more capital almost of Rs. 10 million.  But they are new in the market and they have no idea either their new snack range will be successful or not and will make profit for the company or not. Now in this situation, they have only two options in order to raise their capital either they can lend loan of Rs. 10 million from the ABC bank or they can issue of their company shares of worth Rs. 10 million with the help of equity market.

Requirement:

By keeping in view the above provided situation you need to discuss that which option is feasible for Crispo Public Ltd to raise their capital and why?

Answer 

Crispo public restricted organization new on the lookout and have no clue about the accomplishment of the item all things considered crispo ought to go towards the issuance of offers

 

Then again if organization spent same financial plan on assortment the exploration in the market identified with the objective individuals and consequence of the examination is positive the organization has a choice getting advance in any case not

 

So the primary advantage of gathering money is that subsidizes need not to be reimbursed since value account is grater hazard to the financial backer then obligation financing is to the loan specialist the expense of value is regularly higher then the expense of obligation

 

FIN630 gdb sol
Equity financing option is feasible to raise their capital because:
• Less risk: There is less risk with equity financing
• Credit problems: High interest cost
• Cash flow: Equity financing does not take funds out of the business.
• Long-term planning: Equity investors have a long-term view

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