Idaho Corporation is a new company recently incorporated. It is 100% owned by Jamison who is trying to determine whether to issue stock or debt in exchange for the cash he is using to fund the corporation. He is considering having the corporation issue either (1) $11,000,000 in debt and $1,000,000 in stock or the reverse, (2) $1,000,000 in debt and $11,000,000 in stock. The debt would require annual interest payments of 7%, with no principal payments for five years.

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Jamisons decision between issuing 11000000 in debt and 1000000 in stock versus the reverse depends o... View the full answer