Suppose Nile expects $4.52 in EPS next year if it does not go through with the investment and associated financing.As a shareholder,to satisfy its funding needs for the investment opportunity,do you prefer the company issues $100 million in new debt at an interest rate of 7%,or issues 2 million shares of equity at a target price of $50?
Show supporting calculations,and provide arguments and potential counter-arguments for your recommendation.

Question

Suppose Nile expects $4.52 in EPS next year if it does not go through with the investment and associated financing.As a shareholder,to satisfy its funding needs for the investment opportunity,do you prefer the company issues $100 million in new debt at an interest rate of 7%,or issues 2 million shares of equity at a target price of $50?
 Show supporting calculations,and provide arguments and potential counter-arguments for your recommendation.

Quizplus · Accepted Answer

The Answer of Suppose Nile expects $4.52 in EPS next year if it does not go through with the investment and associated financing.As a shareholder,to satisfy its funding needs for the investment opportunity,do you prefer the company issues $100 million in new debt at an interest rate of 7%,or issues 2 million shares of equity at a target price of $50?
 Show supporting calculations,and provide arguments and potential counter-arguments for your recommendation.

Suppose Nile Expects $4