Two options available selling bonds or stocks

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Reference no: EM131339093

Your company wishes to raise $40m for expansion of facilities. Your stock currently sells at $100/share. You have two options available, selling bonds or stocks. Prior to the expansion, the company has 500,000 shares of common stock outstanding, no debt, no preferred. Based on expected income of $1M and $5M, should the company

a. sell common shares

b. sell bonds paying 6%

Be sure to explain your answer and show any need calculations/assumptions.

Reference no: EM131339093

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