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Continental Carriers is considering options to finance the acquisition of Midland Freight. The options are: issuing common stock, preferred stock, or long-term debt. Long-term debt has the lowest cost of capital at 6% and allows for tax deductibility of interest payments. Models show that even with earnings $4-12 million lower than expected, Continental Carriers could still pay off the debt over 15 years through the annual sinking fund payments. Therefore, the document recommends issuing long-term debt in t

Author

Natalie E Wilson

Language

EN