Each proposal and recommend a course of action

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Reference no: EM13753362

MM Corporation has seen its profit increase by over 15% per year during the past three years. The company is considering expansion and believes that it will need to raise $10,000,000. It is considering the following alternatives:

1. Issuing 1,000,000 shares of $1 par value common stock. The stock is currently selling for approximately $10 per share.

2. Issuing $10,000,000 of 25 year 10% bonds.

3. Issuing $10,000,000 of 25 year 8% convertible bonds. The bonds can be converted by the bondholders into shares of common stock after 5 years at the rate of 100 shares of common stock for every $1,000 bond converted.

Required: Discuss the advantages and disadvantages of each proposal and recommend a course of action for MM.

Reference no: EM13753362

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