Your firm is considering a project which requires an initial investment of $5 million. Your target D/E ratio is 0.67. Flotation costs for equity are 8% and flotation costs for debt are 2%. What is the true cost (in dollars) of the project when you consider flotation costs?

Multiple Choice

• $5.57 million

• $5.61 million

• $5.24 million

• $5.30 million

• $5.00 million