Two businesses in very different circumstances are

pondering how to #6716

Two businesses in very different circumstances are pondering how to raise $2
million.HighTech.com has fallen on hard times. Net income has been low for the last three
years, even falling by 10% from last year's level of profits, and cash flow also took a nose dive.
Top management has experienced some turnover and has stabilized only recently. To become
competitive again, High Tech needs $2 million to invest in new technology.Decorator Services is
in the midst of its most successful period since it began operations in 2012. Net income has
increased by 25%. The outlook for the future is bright with new markets opening up and
competitors unable to compete with Decorator. As a result, Decorator is planning a large-scale
expansion.RequirementPropose a plan for each company to raise the needed cash. Which
company should borrow? Which company should issue shares? Consider the advantages and
disadvantages of raising money by borrowing and by issuing shares, and discuss them in your
answer.View Solution:
Two businesses in very different circumstances are pondering how to

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