Management Financial Decisions


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Management of financial decisions must be done with a lot of accuracy. These decisions should be made by the managers after considering the various parties who are interested in the affairs of the company. These factors require the management to come up with different ways of managing the finance of the company. There are various methods that can be employed in appraising an investment hence the best must be chosen. These activities are aimed at increasing the interests of the people. This is very important since the people are in a position of understanding the policies of the company. The company acquires these resources from different sources of funds.      
Part 1
Q1.1: Analyze the costs of different sources of finance
Q1.1: Analyze the costs of different sources of finance
A company has various sources of finance. These sources are necessary as they create a better way of financing the operations of the company. The main source of finance is the equity capital. The equity capital refers to the money raised by the shareholders once they buy the shares of a given company (Nowicki 2010). This is very important since it determines an approach that will be used by the company in maintaining the various operations. The shareholders are known at contributing a lot towards the success of the company. The equity capital also consists of reserves that are either revenue reserves or capital reserves.
The other major source of capital is debt capital. The debt capital in this case relates to the loan and debentures. The loan is obtained from the banks while the debentures are raised from the individuals or large organizations. The loan is granted to the company after issuing security in form of debentures. These debentures are paid for once they mature hence they are described as a major source of capital.