2 Financing Choice (15 marks) Health Provence it has been listed on front compartment C since 2005. The most recent stock prices 12.90 euros. The Company was founded in 1995 by Claude Sant who is still the CEO and cleman of the board of directon The Sant family holds 58% of the company ownendip and voting rights. Health Provence is a pharmaceutical company and consequently belongs to a research-intmsive industry with significant investments in R&D projects. The Table below shows recent financial data about Health-Provence Data in millions ( Shareholders' Equity Total 2017 2018 125 115 350 330 Financial Debt 40 38 Cash and Cash equivale Profit from recurring operation 34 28 Operating Prof 30 28 Net cost of financial deb 3 3 Average stock price 12 11 I Outstanding shares (ii) 63 62 RATION REQUIRED The company in considering a nne investment project whose value represent 25% of total equity The company's CEO is contemplating two alternative financing sources: (1) use of financial des to fund the project or (2) new share issue (capital increase) either in the form a rights offering (issue with nights) or a regular share me without preferential absorption nights to existing shareholders Among the two financing alternatives, which one would you recommend to Health Provinci You need to quantify the company's financing need, available debt capacity, the new share price and the number of shares to be mond (with rights or without right). Your should also discuss the pros and cons of the two financing alternatives Health Province inc and explan which option you recommend to the company. Year answer should be fully justified and not exceed 15 l Equity/Total Assets 35.7% 34.5% Financial Debt/Equity 0.32 0.33 Net Debt/Equity 0.25 0.26 Net Debt/profit from recurring operations 091 100 Operating profit/Net cost of financial de 10.00 9.33 Cash/Total Assets 2.6% 2.4% INDUSTRY DATA Net Debt/Profit from recurring operations 19 13