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Bushwhacker Mowing needs $ 3 6 0 milli Gerald Morris Corporation ( GM ) plans to issue bonds to raise $ 9 5 million. GM

Bushwhacker Mowing needs $360 milli Gerald Morris Corporation (GM) plans to issue bonds to raise $95 million. GMs investment banker will charge flotation costs equal to 5 percent of the total amount issued. The market value of each bond at issue time will be $1,000. How many bonds must GM sell to net $95 million after flotation costs? Assume the fractions of bonds cannot be issued. Show how much of the total amount issued will consist of flotation costs and how much GM will receive after flotation costs are paid. on to support growth. If it issues new common stock to raise the funds, the issuing cost charged by the investment banker will be 4. percent. Additional costs associated with the issue will total $288,000. If Bushwhacker can issue stock at $60 per share, how many shares of common stock must be issued so that it has $360 million after flotation costs? Show how much of the issue will consist of flotation costs and how much Bushwhacker will receive after flotation costs are paid.

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