The aiternative is a less expemive press that woud require more labour for set up and production. If they purchased the second press. variatle costs will be $1,300,000 per your and fied conts wnudes be 5500,000 per youc. Your fiend in alwo trying to understand if there's a benett to borrowing money from the bunk fo finance the pariniting buniness, ar woild they be better off francing the business throegh sharebolder's equity. They believe thuy can finance the entire $5,000,000 in assets they will need ty seling s00,000 shares to friends and tamily. Alematively the bunk is wiling to fend them 53,000,000 at 8.00on interest with the regt cominge frem the sale of 200000 shares to friends and family. The company faces a tar rate of 305 Obvously there are four different wars your friend can put together their balance sheet. They aan: (a) buy the expensive press and finance it entirely through shareholder's equity (b) buy the expensive press and finance it through a combinution of dibt and shareholder's equity. (c) buy the less expensive press and finance it entirely through zhareholders equity (d) buy the iess expenoive presis and finance it through a combination of debt and shareholder's equity (Note: Whether they buy the more expensive or less expensive press. assume they will always need 55,000,000 in assets if they buy the less expersive press, they simply wil hive more money to invest in inventory.) Solution The aiternative is a less expemive press that woud require more labour for set up and production. If they purchased the second press. variatle costs will be $1,300,000 per your and fied conts wnudes be 5500,000 per youc. Your fiend in alwo trying to understand if there's a benett to borrowing money from the bunk fo finance the pariniting buniness, ar woild they be better off francing the business throegh sharebolder's equity. They believe thuy can finance the entire $5,000,000 in assets they will need ty seling s00,000 shares to friends and tamily. Alematively the bunk is wiling to fend them 53,000,000 at 8.00on interest with the regt cominge frem the sale of 200000 shares to friends and family. The company faces a tar rate of 305 Obvously there are four different wars your friend can put together their balance sheet. They aan: (a) buy the expensive press and finance it entirely through shareholder's equity (b) buy the expensive press and finance it through a combinution of dibt and shareholder's equity. (c) buy the less expensive press and finance it entirely through zhareholders equity (d) buy the iess expenoive presis and finance it through a combination of debt and shareholder's equity (Note: Whether they buy the more expensive or less expensive press. assume they will always need 55,000,000 in assets if they buy the less expersive press, they simply wil hive more money to invest in inventory.) Solution