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The Exceptional Service Grading Company requires a capital infusion of $500,000

Accounting Nov 17, 2020

The Exceptional Service Grading Company requires a capital infusion of $500,000. It is currently a closely held corporation with less than 25 shareholders. Although the shareholders are not all related to each other, they all know each other, and they view the business as a family business. The financial statements should be familiar to you because you performed a basic financial analysis of the company in Unit 1 of this course.
Several alternatives are available to the company, consisting of the following:
·        Obtain private debt financing
·        Seek out a private investor(s) who would be willing to share ownership (private transfer of partial ownership)
·        Seek out offers for a private buy-out (private transfer of entire ownership)
·        Issue public debt (corporate bonds)
·        Issue public common stock (public equity offering)
Briefly discuss each alternative and include implications to the company's capital structure and cost of capital, if any. Considering the size of the investment ($500,000 infusion), provide a conclusion on how it might impact the financial statement reviewed in Unit 1. No calculations are required

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