You are a financial manager with a medium-sized company, Kangaroo Express. The company is owned and managed by the Marsupial family. Currently, 60% of the company’s financing is composed of long-term notes, 20% is current liabilities, and the remainder consists of stock held by members of the Marsupial family. You have been asked to meet with the company’s top management to discuss the company’s capital structure and plans to raise capital for expansion.

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Write a short report describing alternative types of financing Kangaroo Express might consider. Explain the risk and return implications of each alternative for the Marsupials.