Prior to beginning work on this discussion forum, read Chapters 16, 17, and 18 in the Foundations of Financial
Management texbook.
Assume you are the CFO of a medium-sized company and you are advising the CEO on some upcoming
strategic initiatives that will have long-term implications. In other words, these are important decisions.
For your initial discussion forum post, address the following questions posed by the CEO:
It appears we may need to raise more capital. Is expanding debt a good idea? Why or why not and should our
given assets impact this decision?
In our economic environment, should we issue bonds, common stock, or preferred stock? What would be some
pros and cons?
Or should we forego this immediate opportunity and buy back some of our outstanding bonds or repurchase
some of our common stock? What market conditions would make this a good move; what might be some pros
and cons?
Are we obligated to pay our shareholders a dividend?
Sample Solution