Reference no: EM132525893

Eleanor has approached two potential investors for investment in the algae bio-fuel project. The proposals from each party are outlined below: a. Trinity Venture Capitalists (Trinity) - When BFG started operations, Trinity provided some initial funding which has since been paid back. Trinity is now proposing to invest $2,000,000, to be used to commercialize the algae production. BFG will issue 200,000 non-voting, cumulative preferred shares at a price of $10 per share. Cumulative dividends at the rate of 6% will be paid on the preferred shares. These shares are convertible into common shares on a one-toone basis at the option of Trinity any time after 20X5. Any dividends in arrears must be fully paid prior to redemption or conversion. BFG may redeem these shares any time after 20X9 and prior to conversion. Trinity requires that two representatives be members on the board of directors who will be involved in the day-to-day operating, strategic, and financial decisions. b. Sherry LePage, a private investor and current board member - Sherry recently inherited some cash and is looking to make an investment. She has offered to invest $2,000,000 in the form of a loan. The loan will bear annual interest at 7%, payable monthly. The loan matures in 20 years when the full amount of principal is due.

Problem 1: Using the professional Way, describe qualitative factors that should be considered for each of these proposals and make a recommendation as to which proposal should be accepted.