Question
Goodbye, Inc., recently issued new securities to finance a new TV show. The project cost $13.3 million, and the company paid $655,000 in flotation costs.
Goodbye, Inc., recently issued new securities to finance a new TV show. The project cost $13.3 million, and the company paid $655,000 in flotation costs. In addition, the equity issued had a flotation cost of 6.3 percent of the amount raised, whereas the debt issued had a flotation cost of 2.3 percent of the amount raised. If the company issued new securities in the same proportion as its target capital structure, what is the companys target debtequity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Debtequity ratio = |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started