1. 1 PEMBELANJAAN PERUSAHAAN LECTURE 5b – THE FINANCING PROCESS

2. PP/MB-IPB/TA/10 2 DEBT vs EQUITY Fixed Claim High Priority on CF Tax Deductible Fixed Maturiy No Management Control Residual Claim Lowest Priority on CF Not Tax Deductible Infinite Life Management Control Debt EquityHybrids (Combinations D & E) External Financing Internal Financing

3. PP/MB-IPB/TA/10 3 The Choices Equity can take different forms: Owners investing their savings : Very small businesses Owners investing their savings : Very small businesses Venture capital : Slightly larger businesses Venture capital : Slightly larger businesses Common Stock : Publicly traded firms Common Stock : Publicly traded firms Debt can also take different forms: Bank Loans : Private businesses Bank Loans : Private businesses Bonds: Publicly traded firms Bonds: Publicly traded firms

4. PP/MB-IPB/TA/10 4 DISADVANTAGES OF EXTERNAL FINANCING OPTIONS PRIVATE FIRMS: Difficult to raise Loss of control and flexibility PUBLICLY TRADED FIRMS: Expensive (issuance cost  new equity) Lost flexibility (new debt)

5. PP/MB-IPB/TA/10 Untuk melihat file lengkapnya silahkan menghubungi kami di www.mb.ipb.ac.id www.mb.ipb.ac.id