Financing Strategy. A new company plans to obtain $18 million financing. The company expects to obtain a yearly income of $2 million before interest and taxes. The firm is considering issuing bonds or...

Financing Strategy. A new company plans to obtain $18 million financing. The company expects to obtain a yearly income of $2 million before interest and taxes. The firm is considering issuing bonds or an equal amount of bonds and preferred stock. The interest rate on bonds is 14 percent. The tax rate is 46 percent. What financing strategy would you recommend?