Cully Company needs to raise $29 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 60 percent common stock, 10 percent preferred stock, and 30 percent debt. Flotation costs for issuing new common stock are 12 percent, for new preferred stock, 6 percent, and for new debt, 2 percent.

What is the true initial cost figure Southern should use when evaluating its project?

Multiple Choice

$30,393,013

$27,066,667

$31,659,389

$32,925,765

$31,436,000