Southern Alliance Company needs to raise $20 million to start a new project and will raise the money by selling new bonds (D). The company will generate no internal equity (E) for the foreseeable future. The company has a target capital structure of 60 percent common stock (w_E), 10 percent preferred stock (w_P), and 30 percent debt (w_D). Flotation costs for issuing new common stock are 11 percent, for new preferred stock, 6 percent, and for new debt, 3 percent. What is the true initial cost figure Southern should use when evaluating its project? (Do not round your intermediate calculations.)

Multiple Choice

• $22,633,297

• $21,762,786

• $18,666,667

• $21,620,000

• $20,892,275