As shown in the image the questions are:

1. what should the firm use as their weighted average flotation cost?

2. if the firm has to invest 900,000 in the project how much money does it have to raise (round to the nearest dollar)?

3. will the firm invest in the project if (a) there was no flotation cost and (b) there were flotation costs?

(Short Answer - Chapter 13) Downtown Stores is considering a project with an initial investment of $900,000. The present value of the future cash flows of the project is $950,000. The company can issue equity at a flotation cost of 8.76 percent and debt at 5.93 percent. The firm currently has a debt-equity ratio of 0.35. Thirty (301 percent of equity will come from retained earnings. (internal sources). What should the firm use as their weighted average flotation cost? If the firm has to invest $900,000 in the project how much money does it have to raise (round to the nearest dollar)? Will the firm invest in the project if (a) there were no flotation costs and (b) there were flotation costs? Credit will only be given if you provide numerical support for your answers