Which finance is better to be used debt or equity? based on the below information :

You have been engaged as a management consultant by Scylace plc, a grocery retail chain. You have been asked to evaluatethree alternative proposals financing expansion. The options are:

to issue a bond redeemable in 20 years

to issue a bond redeemable in 50 years

or to issue new shares.

The details of the proposed alternative bonds and their expected market values are as follows:

20 year bond

Face Value of each bond 100

Nominal Interest Rate 8.0%

Predicted market price of bond 150

50 year bond

Face Value of each bond 100

Nominal Interest Rate 6.5%

Predicted market price of bond 120

Scylace plc has ordinary shares with a nominal value of 1 each listed on the London Stock Exchange.

The market price of 1 Scylace ordinary shares is 570p

Over the last year, Scylace has paid a dividend of 24.00p per share.

The directors are expecting the company to pay dividends of 24.75 per share over the next year and expect dividends to grow at a constant percentage rate for the foreseeable future.

YTM 20 YEAR = 3.33

YTM 50 year = 5.05

Cost of Equity for Scylace= 7.34