You are a consultant for energy company. It is a utility company. It is thinking about expanding its energy production by opening up a new plant. The owners are at looking at different options and have hired you to prepare a presentation for them with information on each of the following options for raising capital for this project:
Issuing shares is one way of raising funds for capital expansion. Discuss the advantages and disadvantages of issuing common shares to raise funds for capital expansion.
Issuing bonds is another way of raising funds for capital expansion. Discuss the advantages and disadvantages of issuing bonds to raise funds for capital expansion.
What is the financial statement impact of issuing stock compared to issuing bonds? Explain how stock and bonds impact the calculation of debt-to-equity ratio.
If they issue preferred stock instead of common stock, what is the impact on financial statements?