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The directors of Hero Ltd. have decided to modernize the plant and machinery at an estimated cost of Rs. 1 crore, but could not decide whether to issue equity shares or debentures for this purpose. As finance manager of the company, advise the directors whether to issue equity shares or debentures in the interest of the company and why?

Equity shares
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Debentures
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Equity share bcz debentures are short term source of finance
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??????
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Monopoly market is a market in which there is the rival or a competitor of that particular market enterprise
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As it for plant and machinery...so we can see it's a fixed assets...so it should be for a long term, therefore the answer is equity share.
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As a finance manager of the company, I would advice the directors to issue the preference shares as by issuing preference shares, a company is benefited in the following ways.

1. Lifetime retention - A company need is not bound to repay the preference share capital amount during its lifetime.

2. No charge on company's assets - The preference shareholders have no right on the assets of the concerned company. So in this manner, they have no right to claim any amount (by selling-off company's assets) in case the company fails to make dividend payments.

3. No obligation - In case, the company incurs losses, then it is not required to pay dividend to its preference shareholders. 

On the other hand, debentures will not be chosen because of the following demerits of debentures.

1. ​ The legal boundation of a company to pay interest on debentures increases its payment obligations .
2. The borrowing capacity of a company gets limited with further issue of debentures.
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