Suppose Rush Corp wants to borrow money to build a production facility in Mexico. It can borrow by issuing fixed interest rate bonds at 8% or issue equity. Furthermore, assume Rush Corps stock has a beta of 1.25, the interest rates on risk free Treasury securities are 2 percent, the Wilshire 5000 stock index is expected to be 6%, and Rush Corps tax rate is 20% (0.2).

Should Rush Corp issue debt or equity if it were to borrow funds? Briefly explain.