Continental Carriers

the company should consider in order to end up to its desired goals andobjectives.

1.

Through getting the income and dividend data for 1988, before the effects of the acquisition can be reflected, the current operating and financial position of the Continental Carriers, Inc. must first be evaluated.

2.

Consider the effects (positive or negative) of the acquisition on earningsbefore interest and taxes, interest expense, tax expense, dividends and keyfinancial indicators such as the degree of financial leverage, the debt ratio,earnings per share, and the resulting effective interest rate under each of thealternatives. This will help the company to overview which alternative willcontribute the most remuneration with the assessment and comparison to thecurrent situation and to other alternatives.3. It will be advisable for the company to graphically

4.

For each financing plan, it would be functional for the company to graphicallycharacterize the correlation between the EPS and EBIT.

5.

All cash inflows and outflows for the 15 years should be verified with eachalternative form of financing – this will result to exposure to the achievability of pursuing any one strategy, showing the company's expected revenues andcosts. (

Only disparity costs and revenues tied to each approach should beused in the study).

6. All qualitative factors should be taken into consideration which has greater effects in the decision such as company policy and market performance.

Maximization of wealth of existing stockholders, utilization of future earnings and diminution of risk should be the basis on the company's preference of financing

XI.

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