1.Discuss the Finance Manager different considerations in making a finance decision

TheRiskinvolved in raising the funds. The risk is higher in the case of debt as compared to the equity.

TheCostinvolved in raising the funds. The manager chose the source with minimum cost.

TheLevel of Control, the shareholders, want in the organization also determines the composition of capital structure. They usually prefer the borrowed funds since it does not dilute the ownership.

TheCash Flowfrom the operations of the business also determines the source from where the funds shall be raised. High cash flow enables to borrow debt as interest can be easily paid.

TheFloatation Costsuch as broker's commission, underwriters fee, involved in raising the securities also determines the source of fund. Thus, securities with minimum cost must be chosen.