Myriad Inc.'s management has been asked to consider the acquisition of a competitor. The acquired competitor is expected to generate an 8% return on assets. As CFO you were given the responsibility to prepare a proposal as to how to fund this project as concerns over the current debt as a % of total assets and the preservation of the current dividend yield have been expressed by the Board of Directors. Total cost of the acquisition is estimated at $60,000,000. The current debt as a percentage of total assets is 59%. A recent change in government has resulted in corporate taxes increasing to 27% of taxable income. Current share price is $50.00 with a 5% dividend and an future expectation of 2% annual growth rate. You have come up with two strategies and need to develop a recommendation of one or the other. The details of each option is provided below: Option A) - New Bond issue - 30 years - $29,000,000 - Coupon rate - 8.00% - Flotation costs of 1.25% - New Equity - $31,000,000 - Flotation costs - 1.55% Option B) - Mortgage - 25 years - $15,000,000 - Fixed rate - 8.5% (including financing fees)