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Abin
0450-21-O-N-11-4e
Vaibhav
TOPIC QUESTION - PAPER 1
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Vaibhav
September 9, 2025 at 1:06:49 PM
May/June 2022
Version 3
5.0 Financial Information and Decisions
5.1 Business Finance: Needs and Sources
YOUR ANSWER
An advantage of issuing shares is that they dont have to be repaid with any interest. However , the firm will have to pay dividents to share holders. An advantage of using a bank loan is that the loan can be for varying periods of time. However it has to be repaid with interest. I think issuing new shares is the better option for a limited company since bank loans may add risk gearing to the business and issuing new shares means no interest has to be paid .
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