Trower Corp. has a debt-equity ratio of .80. The company is considering a new plant that will cost $115 million to build. When the company issues new equity, it incurs a flotation cost of 8.5 percent. The flotation cost on new debt is 4 percent.

What is the initial cost of the plant if the company raises all equity externally?

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What is the initial cost of the plant if the company typically uses 55 percent retained earnings?

Initial cash flow$

What is the initial cost of the plant if the company typically uses 100 percent retained earnings?

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