Chapter 18, Problem 19MC

Summary Introduction

Case summary:

Restaurant R, a family-owned restaurant cable based in Country A, has grown up to the point where it is feasible to expand across the entire Southeast. The planned expansion would allow the company to raise new capital of approximately $18.3 million.

The family might like to vend common stock to the public to collect the $18.3 million because Restaurant R's already has a of 50 percent debt ratio and because members of family already have all their personal prosperity capitalized in the corporation. The family, however, wants to retain power over voting.

To determine: The way in which company manage the risk structure of debt through project financing.