Question
The Faraway Moving Company is involved in a major plant expansion that involves the expenditure of $ 179million in the coming year. The firm plans
The Faraway Moving Company is involved in a major plant expansion that involves the expenditure of $ 179million in the coming year. The firm plans on financing theexpansion through the retention of $ 138million in firm earnings and by borrowing the remaining $ 41million. In return for helping sell the $ 41million in new debt, the firm's investment banker charges a fee of 250basis points (where one basis point is 0.01 %).If Faraway decides to adjust for these flotation costs by adding them to the initial outlay, what will the initial outlay for the project be?
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