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Tomorrowland is considering a project with an initial start up cost of $960,000. The firm maintains a debt-equity ratio of 0.50 and has a flotation
Tomorrowland is considering a project with an initial start up cost of $960,000. The firm maintains a debt-equity ratio of 0.50 and has a flotation cost of debt of 6.8 percent and a flotation cost of equity of 11.4 percent. The firm has sufficient internally generated equity to cover the equity cost of this project (Hint: you can assume that the flotation cost for equity is zero for this project). What is the initial cost of the project including the flotation costs? $979,417 $982,265 $1,065,089 $992,386 $1,038,513
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