Four individuals are the collective owners, directors, and shareholders ("principals") of Cool Runnings Manufacturing Company (CRMC), which designs and manufactures snow sports equipment such as snowboards, racing skis, and related products. The principals built the company over a 10-year period from start-up to over $20 million in annual revenue. Six months ago, the principals met and decided to embark on an aggressive expansion plan with the objective of doubling CRMC's production capacity in five years. This plan required approximately $50 million to fund the purchase of real estate, equipment, expanded payroll, additional taxes, and marketing expenses. One reason for this expansion plan was to develop a new snowboard product, the Tectonic Board, which early marketing research indicated would become one of CRMC's best-selling products. The principals were under pressure to develop this new product because of an overall slump in sales. However, given CRMC's current facilities and budget, the product was currently only halfway through the design phase and not expected to be on the market for at least three more years. The demand for CRMC's existing brands of snowboards was slowly, but steadily, declining. In fact, the company's profits had been so stagnant that it could not reasonably afford to borrow the entire amount of the expansion cost given its recently diminishing cash flow. However, because of the development of the Tectonic Board, the principals are hopeful that they can attract capital by selling stock to investors.

1. What are the alternatives for financing this expansion plan? Should CRMC consider a bond? Why or why not? Would selling equity be more or less advantageous than issuing a bond?