The senior management team of your firm is investigating the financial implications of a change to the companys capital structure. The firm currently uses a combination of long-term debt and internal common equity to finance its new asset requirements. Senior management, concerned about economic events that may make borrowing difficult to obtain, is considering two options for Q9. First, borrow $4.5 million in two-year debt, three-year debt and ten-year bonds at an average cost of 4.0%. Alternatively, issue an additional 900K shares of new common stock. The team has asked you to prepare a summary report in the form of a double-spaced memo, outlining the major implications of the proposed change in strategy.

PLEASE CALCULATE AND EXPLAIN EVERYTHING YOU CAN!!! I WILL GIVE YOU A GREAT RATING!!!

Table 1-Current versus Proposed Canital Structure Table 1-Current versus Proposed Canital Structure