Illustrate the advantage and disadvantage of Corporations
Illustrate the advantage and disadvantage of Corporations?
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Advantages: improved ability to raise financial capital (money); defining and comparing stocks and bonds; limited liabilities; corporations have a permanence that is conducive to long-run planning and growth.
Disadvantages: red tape and expense in obtaining a corporate charter; unscrupulous business owners sometimes avoid responsibility for questionable business activities.
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Cost of debt= (1-tax rate)* interest rate * (debt ÷capital employed)Cost of equity = risk free rate + market premium (equity shareholders funds÷ capital employed)
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