In MCI Communications Corp.,1983 Case study:

You can find the case study here:

https://www.chegg.com/homework-help/questions-and-answers/mci-communications-corp-1983-april-1983-wayne-english-chief-financial-officer-mci-communic-q26356147

Question:

What level of debt would you recommend is optimal for MCI?

Market conditions at the time of the case were such that MCI could obtain financing through one of the following: which would you recommend? Keep it simple -- not much technical analysis needed. Note - combinations of options are not possible. a) $500m of 121/2%, 20 yr subordinated debt; b) $400m of common stock issue; c) $1000m of 75/8, 10 yr convertible subordinated debt w/ a conversion price of $54 per share (ie each bond would be converted into 18.52 common shares)