Asked by Ailsa Hansen on May 12, 2024

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The two forms of equity infusion are:

A) long term debt and common stock.
B) direct investment in the company's stock and the retention of earnings.
C) net working capital and accumulated depreciation.
D) preferred stock and long-term debt.
E) dividends and retained earnings.

Equity Infusion

Capital that is provided to a company in exchange for partial ownership, often used to boost the company's growth or stabilize its financial health.

Retention of Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends, often used for reinvestment.

Common Stock

Equity ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends or stock appreciation.

  • Identify and differentiate the forms of equity infusion and their impact on a company’s financial structure.
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Loren Van KriekenMay 13, 2024
Final Answer :
B
Explanation :
The two forms of equity infusion are direct investment in the company's stock (i.e. issuing new shares to investors) and the retention of earnings (i.e. reinvesting profits back into the company). This allows the company to raise capital without taking on debt or diluting existing shareholder ownership.