The corporate Forn and the cost of Capital : Business Economics The Benly Company needs to raise funds for a major expansion. The company is debating whether to issue stock or to issue bonds. If the company issues bonds, then its debts will increase and it will be under additional stress to ensure that its revenues can cover the costs of its debt. If it issues stock, the current owners will lose power and influence. What should the company do? Explain in detail your answer. Solution Bonds vs shares If company will go for bonds they need to pay interest , but in case of shares based on the company performance the dividends will be paid or not. so if the company is not sure about the fixed future returns it is better to go for shares upto the defined limit where they will not be any change in the power of the promotors..