You have just become the Treasurer/CFO of a company. The company's Director of Sales comes in to your office and tells you that his team has just competed a very large order with a new customer. This order will increase unit sales and gross revenue by 25% and it will be completed in the next six months. He expresses his concerns about the company having sufficient resources to meet the demands of this new customer, and then walks out. You have just completed an analysis of the company's financials. 1) The company has $1 of debt for every $2 of equity. 2) The company's WACC is 9% while the company is able to borrow short-term funds at the bank at 2%. 3) The company has positive net working capital but will definitely need to acquire some additional funds to afford raw materials inventory and build enough finished product to fulfill this new order. Once the company recieves the payment for this new and very large order. it will again have substantial positive net working capital.. QUESTONS: A) What part of the capitalization structure would you use to acquire the necessary funds, and why.? B) Would your financing plan change if you discovered that the amount of financing required would be equal to the amount of debt already outstanding? C) Is there some other financing structure that you could use including using the company's assets as collateral? And if so. name one asset that you know has substantial value given that you have not yet had time to analyze the company's balance sheet Due to the new order discussed in Q.1 above, the Chairman of the Board, CEO and President of the company all think that the value of the company's equity will rise substantially. They are in favor of using the company's ability to borrow funds to repurchase outstanding shares of common stock. Their target is to repurchase 25% of the company's outstanding common equity. This would be in addition to the company's proposed borrowing to finance this new and very large order. If the common is trading at $20 and they all believe that the common will rise to 540 per share over the next year given the company's fundamentals and the current condition of the US equity market, how do you feel about this strategy given the following: A) You believe that IF the company's debt/equity ratio rises to 3 , the company's ability to borrow will be suspended B) You have some concerns that the company's WACC could rise to a level that would concern the company's lending bank. Recalculate the company's WACC given the two proposed borrowings. And then calculate the WACC based on the much higher share price. What would you suggest doing