Cully Company needs to raise $$20$ million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of $70$ percent common stock, $10$ percent preferred stock, and $20$ percent debt. Flotation costs for issuing new common stock are $11$ percent, for new preferred stock, $7$ percent, and for new debt, $6$ percent. What is the true initial cost figure Southern should use when evaluating its project?

Multiple Choice

$$21,238,938$

ferences

Book

D

ferences

$$21,238,938$

$$18,400,000$

$$23,008,850$

$$ $$22,123,894$

$$ $$21,920,000$m