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XYZ compa securities to France a new TV show. The project cost 500000and debt-to-equity ratio is 0.6 the flotation cost is 0.06for the equity
XYZ compa securities to France a new TV show. The project cost 500000and debt-to-equity ratio is 0.6 the flotation cost is 0.06for the equity and the flotation cost for debt is 0.03 if you want to raise money from equity and debt, what is the total flotation cost for the firm? what is the total amount to be raised? if you want to raise money from equity and debt, what is the total flotation cost for the firm? what is the total amount to be raised?
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Debt and Equity Amounts Debt Debttoequity ratio 06so Debt Equity 06 Let Equity xThenDebt 06x Equity Equity x from the equation above Total Project Cost and Flotation Costs Total project cost 500000 Flotation cost for equity 006 x Flotation cost for debt 003 06x 0018x Total Flotation Cost Add the flotation costs for equity and debt006x 0018x 0078x Total Amount to Be Raised The total project cost needs to be covered by debt and equityincluding flotation costs 500000 06x x 0078x Combine like terms1778x 500000 Solve for x equityx 28145614 Equity Amount Equity x ...
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Intermediate Accounting
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
1st edition
978-0133251579, 133251578, 013216230X, 978-0134102313, 134102312, 978-0132162302
