Case Studie:
Yell PLC is a telephone directory company who are looking to grow their business by buying more equipment and taking over a rival. The company currently have £4.5 million in retained profit but in two years’ time should have an extra £1 million. Yell PLC operates in a competitive market. They currently have 1 year to pay off their existing loan which they’re paying back in 12 equal instalments with interest. Yell PLC hope to please their shareholders by paying a significant dividend.

Question:
1.d.). Yell PLC wants to grow its business and need to raise money to help pay for more equipment and the £5millon needed to complete a takeover. Recommend if they should use retained profit or issue more shares (9 marks)