First and foremost, by not electing to film financing there is no commitment to make placed payments in the future. Their choice to finance through righteousness eliminated the debt incurred by the current plan. A side benefit to that is there is no loan payment to budget for. A second advantage to equity financing is the comp all does not have to passing up collateral as they would have in the original plan to finance the $50 million. Therefore, the company is not at risk of losing collateral, or possibly the entire business to the financier. Additionally, any possible losses incurred will be partingd with the equity holders. The final advantage enjoyed by AMSC is that they can keep the monetary tractableness described in Aswath Damodarans presentation: The Debt-Equity mint Off: The Capital Structure Decision. According to the presentation, when a cockeyed borrows up to its capacity, it loses the flexibility of financing future projects with debt.
AMSC retained that flexibility by opting for equity financing. With those advantages also come various disadvantages.
First, payments on debt interest are tax deductible but payments on equity are not. Second, equity allows shareholders to share the company profits. With that, equity holders now also hold stake in AMSC and share control. Comparatively, debt financiers have little or no impact on control of the company; assuming payments are being made. dinero are also used to pay the debt, however, so how this weighs step up as a disadvantage would clearly depends on how swell or not the business is doing. At least with debt financing you have a fixed expense that can be accounted...If you want to get a full essay, order it on our website: Ordercustompaper.com
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