Mayweather Corp. has a debt-equity ration of 0.75. the firm is considering a new plant that will cost $48 million to build. When the company issues new equity, it incurs a floatation cost of 8%. The floatation cost on new debt is 3.5%.

What will the initial cost of the plant if it is financed through 60% of retained earnings (60% internal equity).

a) $56,380,786

b) $67,101,222

c) $36,000,636

d) $49,346,670

Answer is C