Jumpin
Jehora Phats was incorporated on January 1, 2012 and a year later it
needs $10,000,000 to expand operations. JJ Phats is the sole shareholder
of the corporation. The corporation is considering three methods to
raise the capital: 1.issuing common shares at FMV 2.issuing preferred
stock with par = $1000 3. issuing 10 year bonds with par = $1000 You
have been hired to determine the best way for the company to obtain the
funds needed which might be a single method or combination of methods.
Using the following information, discuss the pros and cons of each
method and provide necessary calculations to support the position you
recommend. *The company is authorized to issue 1,000,000 shares with a
par value of $1.00 * On January 1, 2013 an appraisal of the company
indicates that it has a current value of $25,000,000. * On January 1,
2013 current interest rates are 3.5% APR and rising. *On December 1,
2012 the competition (LeapinLizards Inc) issued 10,000 ten year
cumulative preferred shares with par = $1000 at 3.4%
Click here: Jumpin Jehora Phats was incorporated on January 1, 2012 and a year later it needs $10,000,000 to expand operations
