OVAL Mode Q4.The ACB Company currently has 100.000.000 common stocks outstanding. For a new investment, the Company needs $ 60 million in new funds. The current EBIT is $ 50.000.000 and is expected to increase by 30% if the firm increases its capital. Suppose that the corporate tax rate is 30%. There are 3 alternatives for the company: i. Issuing 50.000.000 new common stocks at $1 per share. ii. Issuing bonds at an 8% interest rate and iii. Issuing preferred stock at 15% dividend payment. Which alternative should the company choose and, what other factors should it consider? arnings available to equity holders = EBIT - Interest on debt 80.0 150.0

Q4.The ACB Company currently has 100.000 .000 common stocks outstanding. For a new investment, the Company needs $60 million in new funds. The current EBIT is $ 50.000 .000 and is expected to increase by 30% if the firm increases its capital. Suppose that the corporate tax rate is 30%. There are 3 alternatives for the company: i. Issuing 50.000 .000 new common stocks at $1 per share. ii. Issuing bonds at an 8% interest rate and iii. Issuing preferred stock at 15% dividend payment. Which alternative should the company choose and, what other factors should it consider? pings avallable to equity hollers = EBIT - Interest on debt