$6$

Please please solve these questions as soon as possible.

I need correct answers.

And don't answer too long.

Just make sure you are mentioning everything important.

I promise i will rate positive.

Question $6.$

Needinkash plc is considering expanding their business and needs $12,000,000$ to finance this expansion.

The company has total capital employed before the expansion of $35,000,000.$

The value of equity is currently $25,000,000$ and they pay an annual dividend of $2,600,000.$

The value of non$-$current debt is currently $10,000,000$ and they pay annual interest of $800,000.$

The company can raise the $12$ m by either:

Issue new shares

Secure new non$-$current debt

Borrow short$-$term $(12$ months$)$ at a cost of $11\mathrm{.}5\%$ per annum plus a $1\%$ arrangement fee

Finding efficiencies in the management of working capital $($Inventories$,$ Receivables & Payables$).$

Required:

a$)$ How much would each of the four options cost for the first year given the information provided?

$[4$ Marks$]$

b$)$ For each of the four options what are the key points that should be considered?

$[16$ Marks$]$