Question
Gold Alliance Company needs to raise $56 million to start a new project and will raise the money by selling new bonds. The company will
Gold Alliance Company needs to raise $56 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 65% common stock, 5% preferred stock, and 30% debt. Flotation costs for issuing new common stock are 8%, for new preferred stock, 6 %, and for new debt, 2 %.
What is the company's weighted average floatation costs? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).
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