Question
Photochronograph Corporation (PC) manufactures time series photographic equipment. PC raises 60% of its financing from common stock, 10% from preferred stock, and 30% from debt.
Photochronograph Corporation (PC) manufactures time series photographic equipment. PC raises 60% of its financing from common stock, 10% from preferred stock, and 30% from debt. The initial investment would be $12,000,000. The company raises all equity from outside financing. The flotation costs are :
a. A new issue of common stock: Twelve percent.
b. A new issue of 20-year bonds: Four percent.
c. Preferred stock: Six percent.
Required:
What is the true initial cost that PC should use when evaluating its project? (Do not include the dollar sign ($). Round your answer to 2 decimal places (e.g., 32.16).)
True Cost $
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