3 Review the ways in which positive net present value opportunities may arise when a company wishes to raise funds in the financial markets. Use an example to illustrate your answer. (25 marks)

Electrolar AB is planning to set up new operations in northern Sweden. Having established that the investment has a positive net present value, it now has to consider its financing decision. The underwriters to the company state that the total funding required amounts to SKr0.5 billion and that this can be raised through a debt issue or an equity issue.