The Dhofar company is planning to raise OMR. 800000 for constructing a new factory in order to increase its production. The Companys existing capital structure consists of 1500 common stocks; 1500 9% Bonds @100 each; 1500 9.5%Preffered Stock@100 each. The company has following alternative scheme of financing. Kindly suggest which is better and why I.

To issue 4000 common stock @100 each AND issue 4000 9.5% Preferred Stock @ 100

II. To issue 4000, 9% Bonds @100 each AND a bank

To issue 3000 common stock @ 100 each AND To issue 2000 9.5% Preferred Stock @ 100 each AND issue 3000, 9% Bonds @ 100 eachii

The companys EBIT is 300000. The corporate Tax rate is 30%