Evaluating Expansion Financing Options for Granite City Books Granite City Books is planning a $2.5 million expansion of its facilities. It needs to evaluate its options for financing the expansion. The company’s bank might not allow it to obtain more long-term debt financing if its debt-to-equity ratio gets too high. Alternatively, com- mon stockholders might be displeased if their ownership rights become diluted by issuing a substantial amount of preferred stock, or even additional common stock if it’s not issued on a pro rata basis. A workbook has been started that contains a basic Balance Sheet, sol- vency, and capital structure ratio data. Your task is to create scenarios for each financing alternative and prepare reports that Granite City Books’ bank and management can use to compare the various financing alternatives. Complete the following: 1. Open the workbook named Granite. xlsx located in the Chapter 8 folder, and save it as Granite City Expansion. xlsx in the same location.
2. In the Options worksheet, apply appropriate names to the worksheet’s scenario changing cells as described in Table 8.5.
Table 8.5: Descriptions of the changing cells
Changing Cell Description
F9 Change in assets
F12 Change in long-term debt
F14 Change in the dollar amount of common stock issued
F15 Change in the dollar amount of preferred stock issued