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Economic Analysis for Technologists

Economic Analysis for Technologists

Q View the two videos below. The first speaks favorably towards equity financing, while the second gives a more balanced review. • Council for Economic Education. (2012, July 13). Entrepreneurship - Debt and Equity Financing. (Links to an external site.)Links to an external site.[Video File 2:20 min] Retrieved from https://youtu.be/6wBlWqNGyhU • Accion in the U.S. (2015, August 11). Debt vs. Equity Financing. (Links to an external site.)Links to an external site. [Video File 3:23 min] Retrieved from https://youtu.be/aXNVMcUNzaQ After viewing these two videos, please apply what you have learned from the videos and from your textbook to respond following: 1. Explain why the two videos seem to have different conclusions. 2. Overall, debt financing is far more common and larger than equity financing for specific projects and assets. Why do you think that is? 3. What is an appropriate rate of equity financing vs. debt financing for an individual’s new home or new car? Why?

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The 1st video included the approach’s summary which describes the financing on equity through an investor/lender who is trusted. There was a small investment amount and 5 percent return happened to be an important amount for the company’s future. A more practical approach was evident in the 2nd video. The video describes the manner in which there is difference between equity loan and debt loan. It says about the liability of the payment. There is risk associated with the equity loan and the liability lies on the investor. There can be immediate receiving of money in the debt loan.