Question: Considering Genesis's aggressive growth plan, Sensible Essentials suggested that its client should broaden the scope of financing beyond short-term loans and consider long-term financing options- These options would greatly enhance the ability of the operations management team to fund the capital investments and growth in operating expenses-
One option is selling more equity in the company- A public stock offering might be a possibility; however, a company as young and small as Genesis might be hard to value- Sensible Essentials believes that another private investor might require preferred stock dividends in order to mitigate some of the financial risk- Another option is a long-term bank loan-
Acting as the finance expert for Sensible Essentials, respond to the following:
- Identify the sources of long-term financing for Genesis
- Analyze the potential costs and benefits of each option
- Explain how relative risk (from the investor's perspective) impacts the cost of capital for Genesis-
Write your initial response in 3-4 paragraphs- Apply APA standards to citation of sources