This comprehensive problem uses a case study of a real Fortune 500 Corporation to help understand the uses of different types of corporate financing methods.

The paper must be typed using a word processor. Use Times New Roman size 12 font. Illustrations for questions 2 and 4 should be completed using Excel. Use a proper title page, body, and citations page. If you choose, you may put all illustrations at the end on appendix pages.

The company we are using is GameStop Corp, listed as GME on the NYSE. Using the supplied information and referring to the corporate website or other sources as necessary, complete a research paper answering all of the questions below.

In 2008 GameStop Corp did not have an issue of preferred stock. In 2008 GameStop Corp called their bonds Senior Notes.
In 2009 GameStop Corp operated over 6,000 locations.
In 2010 GameStop Corp wanted to open another 600 locations. How did they do?

GameStop Corp is in the position of having to determine how to capitalize their new locations. The 2009 GameStop Corp Annual Report is available at Gamestop Corporation.

Use the data from the 2009 GameStop Corp Annual Report to analyze how the different methods available in capitalizing would affect the company.

Complete or answer the following questions.

1. If GameStop Corp chose to issue another round of corporate bonds, how much interest rate should they offer?

2. Assume that GameStop Corp did issue corporate bonds at your determined bond interest rate. Also assume they used bonds for 30% of their 2009 capitalization. By issuing 30% of their 2009 capitalization in bonds, what difference would result in the earnings per share of common stock? Illustrate using Excel.

3. Would you recommend changing a percentage of their unsecured borrowing to issuing bonds?

4. Would you recommend adding an issue of preferred stock to their financing? If you do, how many shares should they sell, and what should be the selling price? Illustrate using Excel.