Comment on how the approaches are different. Justify your answer with rationales.

When Keith created a new corporation as the sole shareholder, he was advised by his accountant to consider 50 percent of the invested amount as the loan and 50 percent for the purchase of stock.

Discuss the advantages and disadvantages of this structure, as compared with treating the entire investment as the purchase of stock? Comment on how the approaches are different. Justify your answer with rationales.

 

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