Imagine you have been asked to prepare a presentation for the board of directors, regarding the methods for financing business operations. They would like answers to the following questions concerning the use of debt or equity as financing vehicles:
What factors would cause our corporate management to obtain cash by issuing bonds, instead of selling stock?
In what situations would management be wise to issue additional common stock, rather than bonds, to meet long-term capital needs?
Should we issue common or preferred stock, as the preferred method of raising cash through equity financing?
What factors should we consider if we decide to issue a debt instrument to raise cash?
Should we obtain additional equipment through the purchase or lease of said equipment?