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Southern Alliance Company needs to raise $155 million to start a new project and will raise the money by selling new bonds. The company will
Southern Alliance Company needs to raise $155 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 65% common stock, 5% preferred stock, and 30% debt. Flotation costs for issuing new common stock are 7%, for new preferred stock, 5%, and for new debt, 2%.
What is the true initial cost figure the company should use when evaluating its project? enter your answer in dollars, not millions of dollars.
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