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Purple Haze recently issued new securities to finance a new TV show. The project cost 15 million, and the company paid 850,000 in flotation costs.
Purple Haze recently issued new securities to finance a new TV show. The project cost 15 million, and the company paid 850,000 in flotation costs. In addition, the equity issued had a flotation cost of 7 per cent of the amount raised, whereas the debt issued had a flotation cost of 3 per cent of the amount raised. Required: If Purple Haze issued new securities in the same proportion as its target capital structure, what is the company's target debt-equity ratio
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