Homework Answers
We first need to find the weighted average flotation cost. Doing so, we find:
fT = 0.65(0.08) + 0.05(0.04) + 0.30(0.02) = 0.06 or 6%
And the total cost of the equipment including floatation costs is:
Amount raised(1 – 0.06) = $44,000,000
Amount raised = $44,000,000/(1 − 0.06) = $46,808,510.64
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