Company A has a debt to equity ratio of 0.55. The company is considering a new plant that will cost $250 million to build. When the company issues new equity, it incurs a flotation cost of 7%. The flotation cost on new debt is 5%. Calculate the weighted average flotation costs. (Enter percentages as decimals and round to 3 decimals)

Company A has a debt to equity ratio of 0.55. The company is considering a new plant that will cost $250 million to build. When the company issues new equity, it incurs a flotation cost of 7%. The flotation cost on new debt is 5%. Calculate the weighted average flotation costs. (Enter percentages as decimals and round to 3 decimals)

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 1PEA

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