Financial Accounting (Page 560-561)

LO 4Case 2. (Learning Objective 4: Analyze alternative ways of raising S5 millon) Business is going well for Park 'N Fly, the company that operates remote parking lots near major airports. The board of directors of this family-owned company believes that Park 'N Fly could earn an additional $1.5 million income before interest and taxes by expanding into new markets. However, the $5 million that the business needs for growth cannot be raised within the family. The directors, who strongly wish to retain family control of the company, must consider issuing securities to outsiders. The directors are considering three financing plans. three financing Plan A is to borrow at 6%. Plan B is to issue 100,000 shares of common stock. Plan C is to issue 100,000 shares of nonvoting, $3.75 preferred stock ($3.75 is the annual dividend paid on