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The ACB Company currently has 1 0 0 . 0 0 0 . 0 0 0 common stocks outstanding. For a new investment, the Company
The ACB Company currently has common stocks outstanding. For a new investment, the Company needs $ million in new funds. The current EBIT is S and is expected to increase by if the firm increases its capital. Suppose that the corporate tax rate is There are alternatives for the company:i Issuing new common stocks at $ per share. ii Issuing bonds at an interest rate and ili. Issuing preferred stock at dividend payment.Which alternative should the company choose and, what other factors should it consider?
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