FNSINC601: Apply Economic Principles to Work - Finance Assignment

Finance Assignment:

The Board of Ethical Trading Group has asked you to prepare a report on current economic trends and evaluate the impact of these on their proposed plan to move into small-scale sustainable manufacturing. In order to achieve this, they need to raise around $20,000,000 in the capital and they anticipate this will return them an average of $5,000,000 in additional net revenue (after tax and before financing costs). Ethical Trading Group would like you to provide a detailed analysis of their options with regard to capital raising: should they raise capital through shareholder equity or through debt financing or a mix of both? They need to understand the various types of debt, how they work, how they are valued, how they are rated, and whether they should be considering short or long term debt. For the equity, they need to know what type of shares can be issued, what the implications are for the company in issuing different shares, and the risks associated with raising capital via equity. They also need to understand the implications to their company that capital structure decision will have.