Tom Dawes, the founder of Footwear Inc., needs to raise $500,000 to expand his company’s operations.

Tom Dawes, the founder of Footwear Inc., needs to raise $500,000 to expand his company‘s operations. He has been told that raising the money through debt will increase the riskiness of his company much more than issuing stock. He does not understand why this is true. Explain it to him.