Determine how to raise $1 billion:
Assume your project company wants to raise $1 billion and has asked you to recommend the best
methods to finance that amount. Your task is to determine how much debt and how much equity
should be used to raise the $1 billion.
Your response should begin with a general discussion about the pros and cons of debt financing
and equity financing. For debt, you should discuss pros and cons of short-term and long-term
(bond) debt financing. For equity financing, limit your discussion to common stock.
You should then move to a discussion specific to your company – and this is the most important
part of the assignment. Your answer should include consideration of the company’s balance sheet
and income statement, and many of the ratios (especially liquidity, leverage, and profitability)
determined in part 1. You should also consider the costs of debt and equity that you calculated in
part 2. Discuss (using specific amounts/ratios) how these data influenced your recommendation.
You should also include consideration of intangibles such as competitive environment, societal
and business trends, and outlook for your company’s products and services, as well as any other
non-quantitative information that you deem relevant.