Debt Financing •Borrow funds with mandatory repayments and interest. •Interest payments are tax-deductible. •Increases financial risk. •Retain control without diluting ownership. Equity Financing •Raise capital by selling company shares. •No repayment obligations; reduces financial risk. •Dilutes ownership and control. •Share profits with new shareholders. Considerations •Companies with stable cash flows may prefer debt for tax benefits and control. •Companies with uncertain futures might opt for equity to avoid repayment pressures. •Choice depends on financial health, growth prospects, and economic environment.