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Finance Ip5

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Submitted By amber898
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ABSTRACT
This paper discusses the pros and cons about an external financing for proposed production facility. This paper explains the financial aspects of this acquisition. This paper also discusses the alternative options as well as the recommendations for ACME corporations.

ACME Recommendations
Acme has many options for the 500M finance to expand their business. There are two aspects debt and equity. Shareholders can expect a certain return on capital they provided. There are a couple different options of raising finances. One important aspect is Equity shares. While there are advantages, there are some disadvantages to consider ("Features of equity," ).
The advantages are there is a low financial risk. There would be no cash payment obligations and it can be used to trade ("Features of equity," ). Some disadvantages include that it is much more costly. It also means that the ownership would have to be shared. Another disadvantage is that it’s not tax deductible, and because the ownership is being shared, there would be a loss of voting and management control ("Features of equity”). Another aspect is Term loans. Advantages are they have longer repayment terms, flexibility, and tax deductibility of interest. These term loans are good for long term investments because they can keep the lender for a long term commitment ("Term loan," ).
Some disadvantages of term loans include, it can tie up the assets, commits the company with banalities. Term loans are a good finance tool however there are many disadvantages as well as advantages ("Term loan," ).
Mortgage financing is also a smart way to expand Acme Corporations business. The advantage is that they would receive a long term commitment from their customers. The interest is tax deductable; also there is a value of the assets in hand more than the business itself. Some

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