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Suppose your company needs $20 million to build a new assembly line. Your target debt-equity ratio is .75. The flotation cost for new equity is
Suppose your company needs $20 million to build a new assembly line. Your target debt-equity ratio is .75. The flotation cost for new equity is 8 percent, but the flotation cost for debt is only 5 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. Required: Your company's weighted average flotation cost is percent.(Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) The true cost of building the new assembly line after taking flotation costs into account is $. (Do not include the dollar sign ($). Round your answer to the nearest whole dollar amount. (e.g., 32))
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