Please answer the question

Pinnacle Medical Goods is embarking on a massive expansion. Assume plans call or opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company's existing locations, offering more items of inventory and with more elaborate displays. Management estimates that company operations will provide $1 million of the cash needed for expansion. Pinnacle Medical must raise the remaining $7.75 million from outsiders. The board of directors is considering obtaining the $7.75 million either through borrowing at 6% or by issuing an additional 250,000 shares of common stock. This year the company has earned $4.5 million before interest and taxes and has 250,000 shares o $ par oommon stock outstanding. The market price o the co pany's stock is $31.00 per s are. Assume t a no m berore terest and a es s e d to grow by % each ear or he next two years The company's marginal income tax rate is 30%. Read the requirements. Requirement 1. Evaluate the effect of the above projected alternatives on net income and earnings per share two years from now. Begin by selecting the labels needed to analyze the effect of the alternatives on net income and to show earnings per share after the expansion. Next, enter the amounts to show the effect of the borrowing alternative, then enter the amounts to show the effect of the shares of stock alternative. (For amounts with a $0 balance, make sure to enter "O" in the appropriate column. Round the EPS calculation to two decimal places. Enter amounts in dollars instead of millions.) Alternative 1 Alternative 2 Borrow $7.75 milllion Issue 250,000 shares at 6% of stock Less Less: Requirement 2. Complete the memo to Pinnacle's management discussing the advantages and disadvantages of borrowing and of issuing common stock to raise the needed cash. Which method of raising funds would you recommend? Pinnacle Medical Goods s embarking on a massive expansion. Assume plans call or opening 20 new sto es d ring the next wo ears. ach store s scheduled to 3 % roerthan ecompa s x stin o ations. fenn m items of inventory and with more elaborate displays. Management estimates that company operations will provide $1 million of the cash needed for expansion. Pinnacle Medical must raise the remaining $7.75 million from outside The board of directors is considering obtaining the $7.75 million either through borrowing at 6% or by issuing an additional 250,000 shares of common stock. This year the company has earned $4.5 million before interest and tax and has 250 000 shares o $ par common stock outstanding. The market pnce of the company's stock is $31.0 per share. As m that n o e ore interest an a es is expectedto grow 20%, ea ar orth et The company's marginal income tax rate is 30%. Read the requirements Requirement 1. Evaluate the effect of the above projected alternatives on net income and earnings per share two years from now. Begin by selecting the labels needed to analyze the effect of the alternatives on net income and to show earnings per share after the expansion. Next, enter the amounts to show the effect of the borrowing alternative, then enter : no k. :: a t x x' #2che1re: k ti b e: hN, For amounts with a $0 balance make sure to enter in the at prooriate column. Round the PS calculation to two decimal places. Enter amounts in dollars instead of millions.) Requirements Alterna Borrow $7 at 1. Evaluate the effect of the above projected alternatives on net income and earnings per share two years from now. 2. Complete the memo to Pinnacle's management discussing the advantages Less: and disadvantages of borrowing and of issuing common stock to raise the needed cash. Which method of raising the funds would you recommend? Less: Print Done Requirement 2 Com recommend? ete the memo to Pinnacle's management discussing he advantages and disadvantages o borrow and o suing common stock to raise ene e ca w ich method o ra ng und ou ou Choose from any list or enter any number in the input fields and then continue to the next question. Pinnacle Medical Goods is embarking on a massive expansion. Assume plans ca for opening 20 new stres during he next two years. ach store is scheduled to e 30% larger than the company's existing locations, offering more items of inventory and with more elaborate displays. Management estimates that company operations will provide $1 million of the cash needed for expansion. Pinnacle Medical must raise the remaining $7.75 million from outsiders. The board o directors is considering obtaining the S7.75 mil on either trough borrowing at 6% or by issuing an additional 250 000 shares common stock. This year the company has earned $4.5 mil on before interest and taxes and has 250,000 shares of S1-par common stock outstanding. The market price of the company's stock is $31.00pr share. Assume that income before interest and taxes is expected to grow by 20% each year for the next two years The company's marginal income tax rate is 30%. Read the requirements. 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.) The advantages and disadvantages of issuing stock 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 The method of raising funds that I would recommend depends upon the goal of the company in relation to this plan. If the company is looking to select an expansion plan that results in a higher earnings per share I would recommend to raise cash for expansion. If the company is looking for a safe" means of raising cashI would recommend Choose from any list or enter any number in the input fields and then continue to the next