1. A company is exploring how to finance its expansion plans. It has the following options:
   1. Retain more of its net earnings.
   2. Borrow/issue more debt
   3. Issue additional shares or raise more equity (season public offerings)
   4. A combination of all the above.

The financing decision of long-term projects is crucial because of agency relationships. Explain the role of information asymmetry and the agency problem in the financing of long-term plans of a company. In your briefing note your task is to make the board members of the company understand the implications of each form of financing