Suppose your company needs $20 million to build a new assembly line. Your target debt-to-equity ratio is 0.75. The flotation cost fo new equity is 7 percent, but the flotation cost for debt is only 3 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. b. What is your company's weighted average flotation cost, assuming all equity is raised externally? (Do not round Intermediate calculations. Round the final answer to 2 decimal places.) Flotation cost c. What is the true cost of building the new assembly line after taking flotation costs into account? (Do not round Intermediate calculations. Round the final answer to the nearest whole dollar. Enter the answer in dollars. Omit $ sign in your response.) Amount raised $[ %
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
Help me please i will definitely rate in text form only if possible
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
