For this week's Critical Thinking Assignment, step into the shoes of a CEO of a rapidly-growing technology firm based in Southern Colorado. You are planning on raising $180 million to fund the expansion of the company and are deciding between issuing new shares or new debt. You are expecting that earnings in the coming year will be $24 million. Additionally, your company currently has 10 million shares outstanding and is at a solid price of $90 per share. Assuming you are in a perfect capital market, identify the following:

1) If you raise the $180 million for expansion by way of selling new shares, what will the forecast for next years earnings per share be?

2) If you were to raise the expansion funds by issuing new debt with an estimated interest rate of 5%, what will the forecast for next years earnings per share be?

3) What is your companys forward P/E ratio if it issues equity?

4) What is the forward P/E ratio if it issued debt? Identify which option you would recommend and why.