You are evaluating a project that requires $938,000 in external financing. The flotation cost of equity...

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You are evaluating a project that requires $938,000 in external financing. The flotation cost of equity is 7 percent and the

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Answer 1

Answer #1

B. $1,000,000

Average flotation cost = (1/1.25) (0.07) + (0.25/1.25) (0.03) = 0.062

Initial cost = $938,000/(1 - 0.062) = $1,000,000

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Answer 2

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You are evaluating a project that requires $938,000 in external financing. The flotation cost of equity...

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You are evaluating a project that requires $938,000 in external financing. The flotation cost of equity...

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Add Answer to: You are evaluating a project that requires $938,000 in external financing. The flotation cost of equity...

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