Art Wyatt Pool Company wishes to finance a $15 million expansion program and is trying to decide

Question:

Art Wyatt Pool Company wishes to finance a $15 million expansion program and is trying to decide between debt and external equity. Management believes that the market does not appreciate the company's profit potential and that the is undervalued. What type of security (debt or common stock) do you suppose that the company will issue to provide financing, and what will be the market's reaction? What type of security do you think would be issued if management felt the stock were overvalued? Explain.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...