Question
Southern Alliance Company needs to raise $23 million to start a new project and will raise the money by selling new bonds. The company will
Southern Alliance Company needs to raise $23 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 percent common stock, 10 percent preferred stock, and 25 percent debt. Flotation costs for issuing new common stock are 14 percent, for new preferred stock, 8 percent, and for new debt, 4 percent. What is the true initial cost figure Southern should use when evaluating its project? (Do not round your intermediate calculations.) |
rev: 09_20_2012
$25,813,692
$26,846,240
$21,006,667
$24,781,144
$25,507,000
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