Most suitable source of finance for a second e-waste factory?

• A. Retained profit only
• B. Debt financing only
• C. Retained profit may be safest if available, but share capital may suit larger expansion
• D. Government grant only

Answer: (C)

Financing a second, capital-intensive expansion like an e-waste plant comes down to balancing internal funds, debt, and equity. Retained profits are the cheapest and keep control, but they depend on having enough profits accumulated. For a larger expansion, pulling in share capital (equity) provides a bigger cash boost without the burden of regular interest or fixed repayments, which can strain cash flow. Government grants can help, but they’re not reliable as a sole or guaranteed source and often come with conditions. So the strongest approach is to use retained profits if available for a smaller upsize, and turn to share capital to fund a larger expansion, giving flexibility without over-leveraging.