Question 7 7 marks Reporting and analysing equity A family-controlled firm, which is publicly listed on the Australian Securities Exchange (ASX), had been operating successfully for five generations. The firm continues to maintain a policy of raising capital only through equity finance and never through debt. Recently the firm is considering expanding its operation and invest in an offshore project. This project requires $10 million over 15 years to be successful. Due to the high volume of funds required for this project, a suggestion has been made to the board of directors to raise the required capital in this occasion through debt financing. Required 1. Discuss whether the company should maintain its policy of raising capital through equity financing or would you recommend raising funds through debt financing? In your answer you are required to list the advantages and disadvantages of each option i.e., debt and equity financing and provide sufficient explanations and reasoning. (4 marks for listing advantages and disadvantages + 2 marks for explanation = 6 marks) 2. What is your final recommendation to the board of directors (1 mark)