Article Writing Homework Help

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Equity can come from external or internal sources of financing, which one is the least expensive and why?

students responce

Internal source of funds is the least expensive, as this is internally available in the company in the form of reserves, profits , revenues and assets of the company. But sometimes the internal funds are not enough so the company when the requirement of funds is huge so the company may go for relatively expensive external source of financing. The cost of capital for internal sources of finance is pretty low, whereas the cost of capital for external source of finance is high. collateral is not required in internal financing.