CORPORATE FINANCE ACCESS CARD
CORPORATE FINANCE ACCESS CARD
12th Edition
ISBN: 2810023360184
Author: Ross
Publisher: MCG
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Chapter 13, Problem 23QAP
Summary Introduction

Adequate information:

Debt-equity ratio D/E = 0.65

Debt D = 0.65

Equity E = 1

Project cost CP = $137,000,000

Equity flotation cost fe = 8%

Debt flotation cost fd = 3.50%

Percentage equity raised internally IntEq = 60%

Project financed through retained earnings RE = 1

To compute: Project cost for the company B.

Introduction: The Cost of capital refers to the minimum return required by a company to justify the value incurred on the project.

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