M5D1: Equity Financing vs. Debt Financing

Overall, debt financing is far more common and larger than equity financing for specific projects and assets.

This discussion will address the following Module Outcomes:

• MO1: Overall, debt financing is far more common and larger than equity financing for specific projects and assets.

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?