Client Letter Essay Example | Topics and Well Written Essays - 750 words - 1

Client Letter - Essay Example However, on the flip side, there is an advantage that de loan payment is tax deductible and that means that the corporation ends up savings on its tax burden as the progressing payment are made. Given above considerations, the issue is which of the two, debt financing and equity capital in relation to the new corporation; it is advisable to use equity for capital formation. This choice would reduce the risks for the corporation given that it is a new venture. Since the corporation is venturing in a new territory, it is advisable to consider the high risk involved as well as the tax obligations. In this respect, equity capital formation is advised because the corporation will not be in the hook in case of failure. It also offers a flexible payment regime for the corporation .On the same note; the choice would have a positive attribute to the new venture if it is able to acquire investors. That would boost the chances of future prospects for the