The Edison Power Company currently owns/operates a coal-fired combustion turbine plant installed 20 years ago. Edison plans to scrap the existing plant in favor of a more efficient gas-turbine plant.

The new 50-MW gas-turbine plant will cost $65 million. Edison plans to raise the capital from three sources: common stock (45%), preferred stock, (10%), and bonds (45%). The flotation costs are

Source	Flotation Cost	Selling Price	Par Value
Common Stock	4.6%	$32/Share	$10
Preferred Stock	8.1%	$55/Share	$15
Bond	1.4%	$980/Bond	$1000

(a) What is the total flotation cost to raise $65 million?

(b) How many of each: common shares, preferred shares, and bonds, must be sold to raise $65 million?

(c) If Edison pays a $2 annual dividend on common shares and the interest on bond payments is 12%, how much cash should Edison have available to meet both equity and debt obligations? (Note: when common stock dividends are paid to common stockholders, preferred stockholders receive dividends at 6% of par value.)