Key Topics: Dividend policy, debt financing, rights issue, and operational financing strategies.

Models Covered: Dividend growth theory, bond issuance evaluation, rights issue pricing, and leasing analysis.

Description: This case examines various proposals to improve Echo Co’s financial structure and attract investors. Proposal A involves increasing dividends to enhance shareholder appeal, Proposal B evaluates issuing bonds to raise capital, and Proposal C considers a rights issue to reduce gearing and financial risk. Additionally, the case includes the theoretical pricing of rights shares and the evaluation of leasing as a source of operational financing. The task requires analyzing the financial impact, benefits, and risks associated with each proposal.