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CEC
Essay specific features
Written by:
Eric L
Date added:
August 30, 2015
Level:
University
Grade:
A
No of pages / words:
7 / 1750
Was viewed:
6833 times
Rating of current essay:
Essay content:
CEC is now considering whether to use long term bonds, common stock, or preferred stock as method of financing for the $10M acquisition project.
Computation of costs of capital shows that long term bonds have the lowest cost at 5.39%; furthermore, it also results to relatively higher earnings per share which most likely results to higher market price per share as supported by statistical analyses...
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Financial leverage is also favorable starting at EBIT of $2.6M – lower than the projected level of recession of earnings – and higher. Additional risk and cash demand of the bonds is addressed by additional earnings from the acquisition, predicted stability of future earnings, factoring of high levels of receivables, and increasing prices...
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