Question
Suppose you are the owner of a small woodworking business that is privately incorporated. You currently own 100% of the business (equity valued at $100,000),
Suppose you are the owner of a small woodworking business that is privately incorporated. You currently own 100% of the business (equity valued at $100,000), with no long-term debt. Now you decide to purchase a new piece of equipment costing $10,000 through a long term debt because it is the better option for this company since it will give the company the ability to get the equipment it needs at a fixed rate, which allows the company to set the specific amount aside to pay the debt off. Make a counter-argument to their reasoning of using long-term debt financing and support it with at least 2 points.
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