**Problem 14-29 Flotation Costs [LO4]**Chauhan Corporation has a debt-equity ratio of 0.9. The company is considering a new plant that will cost $119 million to build. When the company issues new equity, it incurs a flotation cost of 8.9 percent. The flotation cost on new debt is 4.4 percent.a. What is the initial cost of the plant if the company raises all equity externally? *(Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.)*b. What is the initial cost of the plant if the company typically uses 60 percent retained earnings? *(Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.)*c. What is the initial cost of the plant if the company typically uses 100 percent retained earnings? *(Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.)*- a. Initial cash flow: $130,650,000- b. Initial cash flow:- c. Initial cash flow:

External financing refers to the funds a company raises from sources outside the organization to…

Answered: Chauhan Corporation has a debt-equity…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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