A company's capital structure is comprised of debt and equity. The owner of a business is contemplating growing her product lines, which requires financing. She is evaluating the advantages and disadvantages of both debt and equity as sources of financing. Briefly outline in bullet points what the advantages and disadvantages are of both options. If the company has high financial leverage at this time, what may be the only likely option and why? If the company has low financial leverage at this time, what may be the lowest cost option and why? What option is typically more expensive and why? If equity does not have a scheduled repayment like debt, then how is the investor/shareholder compensated and able to make a return?
