FORMATIVE ASSESSMENT 2 Answer ALL questions. [100 MARKS] QUESTION ONE (25 Marks) 1.1 As a business owner discuss why you would prefer to acquire debt finance that you have been offered by a bank institution. (6 Marks) 1.2 The pooling of funds principle states that the various sources of finance available to any entity are grouped together and used in total various projects. Discuss the two ways or methods that are used to calculate the cost of ordinary shares. (6 Marks) 1.3 Distinguish between a capital lease and an operating lease. (4 Marks) 1.4 Return/ cost, risk and control are important considerations in deciding on a form of finance. You are required to complete the table below by indicating how these considerations apply to long term debt and owners equity: (9 Marks) Consideration Return/ cost Risk Control Long-term Debt Owners Equit