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Cully Company needs to raise $23 million to start a new project and will raise the money by selling new bonds. The company will generate

Cully Company needs to raise $23 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 55 percent common stock, 10 percent preferred stock, and 35 percent debt. Flotation costs for issuing new common stock are 8 percent, for new preferred stock, 6 percent, and for new debt, 4 percent. What is the true initial cost figure Southern should use when evaluating its project?

  • $23,589,744

  • $24,472,000

  • $24,572,650

  • $21,620,000

  • $25,555,556

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