Question

As CFO of Apple, what are the options for financing your business in Europe? Which financing option would you choose, given the business and these times?

Answer 1

Options which I have in order to finance my business in Europe are as follows-

A. I can finance my business in Europe by use of debt financing which will be related to use of debt capital and it will provide me with taking additional advantages in respect to the claiming interest tax shield and it can also lower my overall cost of capital and cost of equity.

B. I can also look to finance through retained earnings because Apple is always known for having a very high retained earning in cash in its books of accounts so I can use retained earning in order to fund growth and expansion projects in Europe

C. I can also use funding of my business through mix of short term financing and long term financing and equity capital as well as it will provide me with better benefits related to optimal capital structure.

I will rather choose debt financing because it will help me in order to take advantage of interest tax deduction in form of interest tax shield and it will also help me in order to lower cost of capital of the entire business as this is a time of high economic uncertainty and interest rates are very low so I would be taking long term loans at a lower interest rate in order to maximise my growth and our business is having a higher cash in books of accounts so it will help in getting these loans at a lower rate of interest because Apple is having a very high creditworthiness.