Your company is evaluating a new factory that will cost $39 million to build. Your target debt-equity ratio is 1.2. The flotation cost for new equity is 9% and the flotation cost for new debt is 4%. The company is planning to use retained earnings for 30% of the equity financing.

Part 1

What are the weighted average flotation costs as a fraction of the amount invested?

Part 2

What are the flotation costs (in $ million)?