Accounting HELP!!!?

Question

Describe a situation in which a company would choose to issue bonds. Discuss the advantages of bond financing. What challenges will this company face regarding bond financing?

Answer 1

you can issue bonds (liability) to fund certain transactions, such as a purchase of an asset. you'd have to come up with the regular interest payments and the lump sum at the end. one other option is to issue stock, which would affect EPS, etc. you have to go into the pros/cons of each. the interest rate on the bond would depend on the credit rating of the company.