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Cully Company needs to raise $20 million to start a new project and will raise the money by selling new bonds. The company has a
Cully Company needs to raise $20 million to start a new project and will raise the money by selling new bonds. The company has a target capital structure of 65 percent common stock and 35 percent debt. Flotation costs for issuing new common stock are 13 percent and 5 percent for new debt. The company pays 30% tax. What is the true initial cost figure Southern should use when evaluating its project?
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