Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I've included the wrong answers so don't give me those again please or I'll have to thumbs down your answer. Thank you. Lucas Corp. has
I've included the wrong answers so don't give me those again please or I'll have to thumbs down your answer. Thank you.
Lucas Corp. has a debt-equity ratio of 65. The company is considering a new plant that will cost $51 million to build. When the company issues new equity, it incurs a flotation cost of 7 percent. The flotation cost on new debt is 27 percent a. What is the initial cost of the plant if the company raises all equity externally? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g, 1,234,567.) b. What is the initial cost of the plant if the company typically uses 60 percent retained earnings? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) c. What is the initial cost of the plant if the company typically uses 100 percent retained earnings? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) Answer is complete but not entirely correct. Initial cost 53,710,000 a. b. Initial cost $ 552,085,300 Initial cost 51,000,000 $ CStep 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