"Strategic" implies long term, as in Strategic Plan. So it is more than just consideration of "this year." Target has a decision to make that has long term impacts. The company has two issues facing it, both of which are in the area of long term financing:

(1)The company has $500 million in unsecured bonds that are due in the next 6 months. (In other words Target must pay off the bond holders.) They must decide what to do. There are two components to the decision: whether to re-issue new financing to replace the "lost funds" and if so, what type of financing to use. They could use all debt financing and reissue new bonds, or use equity financing and possibly issue stock, or issue a combination of the two. Or some other option not listed here. But their CFO has decided they must refinance at least $400 million of the $500 million.

(2)They want to make additional fixed asset investments of $100 million over the next ten years and need to finance this investment too - using either debt financing, equity financing or a combination of the two. Or some other option not listed here.

Resources to use

Utilize the 2016 Target Annual Report financial statements. (Income Statement, Balance Sheet, Cash Flow Statement)

Assume that Target's current bonds are 6% annual interest and that they will be able to issue bonds at the same rate.

Text Chapter 11