A struggling company has a positive cash flow, the cash flow isminimal. If something does not change soon, the company will gounder. The product development team has just created a new productthat will not only save the company from financial demise, but theproduct will revolutionize how the industry does business. Theproblem is that the product is still two years away before it canbe sold to the public, and you will run out of cash within the nextsix months. How would you propose obtaining the funds needed tokeep the company alive and thriving for the next two years untilyou are able to see a return on the product development, and keepthe stakeholders happy? Also, Weighted Average Cost of Capitalrelative to raising capital in bonds, bank notes, preferred equityand common equity must be addressed. Agency costs should beaddressed relative to the leveragng of the firm. Optimal capitalstructure relative to WACC and valuation must be addressed as well.Thanks.
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