suppose your company needs $24 milion to build a new assembly line. your target debt ratio is .60. The floatation cost for new equity is 7%, but the floatation cost for cos of debt is only 3 %. your boss decided to fund the project by borrowing money because the floatation costs are lower and the needed funds are relatively small. a. what do you think about the ratonale behind borrowing the entire amount?

b. what is your company weighted average floatation cost, assuming cost, assuming all equity is raised externally?

c. what is the true cost of building the new assembly line after taking floatation costs into account? does it matter in this case that the entire amount is being rasied from debt