Comet Company plans to build a new corporate headquarter facility in Plano, Texas. Accordingly, the company must consider various ways to finance this capital expansion.

The Board of Directors believes that there are many advantages to issuing both debt and equity securities to obtain capital. The Board must consider the impact of issuing debt or equity securities on the companys financial results as well as its profitability ratios and other metrics. The Board should also consider the expectations of investors related to the type of financing the company chooses. Options for financing the companys expansion include issuing preferred stock, common stock, or bonds.

Prepare a memo discussing the advantages and disadvantages of debt and equity financing and recommend which option you believe is best to Comet Companys Board of Directors. Include an analysis of your recommendation whereby you specifically address the effect of the financing choice on the financial position of the company and the investors expectations. The goal is to determine the ideal way for the company to attract investors while minimizing its cost of funding.