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You are invited to a dinner meeting by the Officer of your company. She advises you that the company is currently contemplating a $100 million
You are invited to a dinner meeting by the Officer of your company. She advises you that the company is currently contemplating a $100 million expansion which will be financed either from the issue of additional common stocks or 10-year 8% semiannual $1,000 par fixed rate bonds. She would like you to advise her on the pros and cons of issuing common stocks instead of bonds and vice versa, and the pros and cons to investors for investing in stocks instead of bonds and vice versa. How many bonds should the company issue today when the bonds' yield to maturity is 6%, if the company wishes to finance the expansion using only fixed rate bonds? (round your answer to the whole bond)
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