Assignment:
William Mays and Randy Vicenti are the two equal shareholders of Square Dog, Inc. William is both an avid boater and king of the grill. The combination proved to be very frustrating to William because the kids' hot dogs kept rolling off the grill on his houseboat when waves rocked the boat. William investigated alternatives and quickly realized that the solution would be a square hot dog. It was very expensive to make square hot dogs using existing technology. William approached Randy, his next-door neighbor, who is an engineer, and together the two of them created a new technology that makes square hot dogs for the same cost as regular ones.
Randy and William incorporated their business to have a structure for the production and sale of the Square Dog. They only expected the Square Dog to be a novelty item with limited sales potential. Sales have surprised them by growing very quickly. The company needs to add another production line to keep up with demand. Randy and William are considering different ways to raise money for the expansion of the company's operations. All the initial funding for the company came from William and Randy when they bought their shares of stock. They know that one way to raise cash is to borrow money, but no bank is willing to loan them the required $10 Million. One banker suggested that they consider issuing more stock or bonds. They do not know what the advantages and disadvantages are of issuing bonds versus issuing common stock, and have no idea how to proceed.
Required: Prepare a memorandum addressed to William and Randy that addresses their issue. Use full paragraphs, not bullet points. You should use proper spelling and grammar. The target length is 500 words (about two pages double-spaced). Your memorandum should include the following headings:
Facts:
Issue:
Recommendation:
Discussion:
Conclusion: [Note your conclusion needs to match your recommendation]