Viola Sporting Goods is embarking on a massive expansion. Assume plans call for opening 25 new stores during the next three years. Each store is scheduled to be 30% larger than the company's existing locations, offering more items of inventory, and with more elaborate displays. Its management estimates that company operations will provide $1.5 million of the cash needed for expansion. Viola must raise the remaining $7.5 million from outsiders. The board of directors is considering obtaining the $7.5 million either through borrowing or by issuing share capital. Requirement 1. Write a memo to Viola's management discussing the advantages and disadvantages of borrowing and of issuing share capital to raise the needed cash. Which method of raising the funds would you recommend? To: Management of Viola Sporting Goods Subject: Advantages and disadvantages of borrowing versus issuing shares to raise cash for expansion The advantages and disadvantages of borrowing to raise cash expansion are as follows: (Leave unused cells blank.) Advantages Disadvantages The advantages and disadvantages issuing shares to raise cash for expansion are as follows: (Leave unused cells blank.) Advantages Disadvantages The method of raising funds that I would recommend depends upon the goal of the company in relation to this plan. Viola Sporting Goods management must prepare budgets which indicate the impact of the new stores in terms of net income and cash flow. If the company is looking to select an expansion plan that results in a higher eamings per share, I would recommend V to raise cash for expansion. If the company is looking for a 'safe' means of raising cash, I would recommend