Common Stock versus Debt. Blake Corporation has $20 million in sales a year. It requires $3.5 million in financing for capital expansion. The debt/equity ratio is 70 percent. The industry has inherent...

Common Stock versus Debt. Blake Corporation has $20 million in sales a year. It requires $3.5 million in financing for capital expansion. The debt/equity ratio is 70 percent. The industry has inherent risk, and earnings show variability. The common stock is selling at a high P/E ratio. The company is considering issuing either common stock or debt. Which type of financing is recommended?