B.Cost of equity is higher than cost of debt. Issuing equity is often perceived poorly, because cost of equity is higher than cost of debt.
Equity is a kind of financing where a corporation solicits funds from different institutions and individuals by providing them shares of the company as ownership. This kind of financial source does not have a set repayment schedule or interest rate.
To achieve its long-term aims and objectives, a firm may raise debt from numerous organisations and individuals. Debt can be identified by repayment and a fixed interest rate, meaning that the amount borrowed is paid back to the lender within a predetermined time frame, and the lender also receives a predetermined interest rate on the amount.
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