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3.1 Explain any four sources of finance that could be used by a public company to finance the purchase of new plant and equipment costing
3.1 Explain any four sources of finance that could be used by a public company to finance the purchase of new plant and equipment costing R1 001 203. (8 marks) 3.2 Broadly, the category of finance available for any business is debt and equity. Which source of finance might be better for a newly formed company? ( 3 marks) 3.3 Dr Criss Cross has been running a private clinic for the last two years. The excellent quality of his services made his clinic popular in no time. Motivated by the success of his business, Dr. Criss Cross is now contemplating the idea of opening many private clinics in different places. However, the money available with him from his personal sources is not sufficient to meet the expansion requirements of his business. His father told him that he can enter into a partnership with the owner of another private clinic, who will bring in more lunds. He is also thinking of getting a bank loan. He is worried and confused, as he has no idea as to how and from where he should obtain additional funds. He discusses the problem with his friend Mr Trust More, who tells him about some other methods like issue of shares and debentures, which are available only to a company form of organisation. He further cautions him that each method has its own advantages and limitations, and his final choice should be based on factors like the purpose and period for which funds are required. Required: Identify four methods of financing the growth of a business that have been mentioned in the case study and discuss two limitations of each method. ( 12 marks)
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