Which form of capital is more expensive for a company, debt/bond or equity financing? Explain.?

Neither.. it depends on the circumstances of the entity. Equity takes many forms but generally involves the entity issuing new shares onto the market. As they are "new" the money goes directly to the entity. Usually the amounts released are insignificant compared to the total equity in the company so generally there is little effect of share price or major shareholders%. (PS some companies regularly release new shares as remuneration to the CEO or or significant salary earners within the business as part of their salary package). Equity financing does not appear as a debt on the balance sheet it merley appears as an increase in shareholders equity. Debt financing can be a problem as it appears as debt on the balance sheet and can have a nasty impact on performance ratios (which affect share prices!) as well as the risk of unexpected interest rate rises. For a reasonably closely held entity debt may be preferred as it keeps "outsiders" out of the business and those owners would not be so worried about he debt level, other entities may prefer equity particulary the release of redeemable shares (ones that the business is entitled to buy back at a later date and which may be classified as debt in certain circumstances) or shares with restricted voting/ dividend rates. Generally all options would be considered in relation to the business current and projected financial position/markets, existing debt levels and so on to determine the best option and it is the financial and environmental circumstances of the entity that ultimately determines the best (and therefore cheapest) option.

Equity financing is more expensive because it dilutes the owner's return. Economically, it is riskier so requires a higher return. Debt is cheaper because if the company earns more than the interest rate on the funds borrowed, the excess goes to the equity holders. And if the company earns less than the interest rate, that wasnt smart financing.