Determine the most efficient financing solution

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The Pasta corporation a Brooklyn based manufacture of homemade pasta needs $1,000,000 and can raise this through debt at an annual rate of 10 percent, or preferred stock at an annual cost of 7 percent. The corporation has a 40 percent tax rate. You are hired as an advisor to determine the most efficient financing solution. Please make a recommendation to managment on which financing option to uilize and why?

Reference no: EM131185188

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