What are the sources of capital a company might consider using when deciding how to fund...

What are the sources of capital a company might consider using when deciding how to fund a long-term investment?

Expert Solution

The long-term sources of capital used by companies are :

Common stock - This involves giving up control, since common stock carries voting rights. However, dividends are optional and not mandatory, unlike interest payments.
Debt - This does involve giving up control, since debtholders do not have voting rights. However, interest has to be paid mandatorily every year
Preferred stock - This is more like debt, since preferred dividend has to be paid every year. However they have preference over common stockholders in case of liquidation.

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