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ACC - JumpinJehosaPhats was incorporated on January 1

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Question;JumpinJehosaPhats was incorporated on January 1, 2012 and a year later it needs $10,000,000 toexpand operations. JJ Phats is the sole shareholder of the corporation.The corporation is considering three methods to raise the capital:issuing common shares at FMVissuing preferred stock with par = $1000issuing 10 year bonds with par = $1000You have been hired to determine the best way for the company to obtain the funds neededwhich might be a single method or combination of methods. Using the followinginformation, discuss the pros and cons of each method and provide necessary calculationsto support the position you recommend.The company is authorized to issue 1,000,000 shares with a par value of $1.00On January 1, 2013 an appraisal of the company indicates that it has a current value of$25,000,000.On January 1, 2013 current interest rates are 3.5% APR and rising.On December 1, 2012 the competition (LeapinLizards Inc) issued 10,000 ten yearcumulative preferred shares with par = $1000 at 3.4%

 

Paper#39373 | Written in 18-Jul-2015

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