Question
HM Corp. has a debt-equity ratio of .85. The company is considering a new plant that will cost $145 million to build. When the company
HM Corp. has a debt-equity ratio of .85. The company is considering a new plant that will cost $145 million to build. When the company issues new equity, it incurs a flotation cost of 8 percent. The flotation cost on new debt is 3.5 percent.
What is the initial cost of the plant if it typically uses 60 percent retained earnings?
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Forecasting Methods And Applications
Authors: Spyros G. Makridakis, Steven C. Wheelwright, Rob J Hyndman
3rd Edition
0471532339, 9780471532330
