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2. Suppose that you are the financial manager of Gulf Electronics Company. The CEO has requested you to write a proposal on n extension of
2. Suppose that you are the financial manager of Gulf Electronics Company. The CEO has requested you to write a proposal on n extension of a new production plant, which is expected to cost 10 million dirhams. The balance sheet of the company shows that the company is currently servicing a 5 years debt from ADCB bank and other loans from bond issue and several lenders, paying nearly 200,000 dirhams per year in interest. The current debt to asset ratio of the company is 0.55. Required? A. Should the company use bond or stocks to finance its project and why? What is your recommendation to the company? 4 points
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