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BBQ Corporation has a target capital structure that is 70 percent equity, 30 percent debt. The flotation costs for equit...

BBQ Corporation has a target capital structure that is 70 percent equity, 30 percent debt. The flotation costs for equity issues are 15 percent of the amount raised; the flotation costs for debt are 8 percent. If BBQ needs $150 million for a new manufacturing facility, what is the cost when flotation costs are considered?

Multiple Choice

  • $130.65 million

  • $150 million

  • $165.42 million

  • $172.22 million

  • $185 million
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Answer #1

x fix E2 2 =D2*B2 с А 1 Investment в Flotation cost (r) 15.00% 8.00% IDE Weights Weighted cost 0.70 10.50% 0.30 2.40% 2 Equit

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