Capital structure refers to the financial structure of a firm. It is the mix of debt and equity capital maintained by a firm. A firm's capital structure is fundamental since it relates to its ability to meet its stakeholders' needs. Modigliani and Miller (1958) were the first to discuss capital structure, arguing that capital structure was irrelevant in determining the firm's value and future performance. On the other hand, Lubatkin and Chatterjee (1994), as well as many other studies, have proved that there exists a relationship between capital structure and firm value.

Discuss TWO (2) factors that a company should consider, in its circumstances, in choosing between equity finance and debt finance as a source of finance.