op Medical Goods is embarking on a massive expansion. Assume plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company's more bems of inventory and with more elaborate displays. Management estimates that company operations will provide $10 million of the cash needed for expansion Hilep Medical mustrise the remaining wing location o From outsiders. Click the icon to view information on raising the additional funds) Read the requirements g on Requirement 2. Complete the memoto Hilltop's management discussing the advantages and disadvantages of borrowing and of issuing common stock to raise the needed cash. Which method of signs would you recommend? To: Management of Hilltop Medical Goods Subject: Advantages and disadvantages of borrowing versus issuing stock to raise cash for expansion The advantages and disadvantages of borrowing to raise cash for expansion are as follows: (if a box is not used in the table, leave the box empty, do not select a label) Advantages Disadvantages 0 More Info Requirements 1. Evaluate the effect the two financing alternatives will have on Hilltop's net income and eamings per share two years from now. 2. Complete the memo to Hillop's management discussing the advantages and disadvantages of borrowing and of issuing common stock to raise the needed cash. Which method of raising the funds would you recommend? The board of director is considering obtaining the $6.75 milion ether by borowing at 7% by issuing an additional 500,000 shares of common stock. This year the company has earned $2.5 million before interest and taxes and has 500,000 shares of $1.par common stock outstanding the market price of the company's stock is $13.50 per share. Assume that Income before interest and was is expected to grow by 20% each year for the next two years. The company's marginal income tax rate is 40% Print Done Print Done