The Upper Tier has a current debt-equity ratio of .52 and a target debt-equity ratio of .45.

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The Upper Tier has a current debt-equity ratio of .52 and a target debt-equity ratio of .45. The cost of floating equity is 9.5 percent and the flotation cost of debt is 6.6 percent.

What should the firm use as their weighted average flotation cost?

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Principles of Finance

ISBN: 978-1285429649

6th edition

Authors: Scott Besley, Eugene F. Brigham

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Posted Date: Apr 13, 2023 01:39 AM

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The Upper Tier has a current debt-equity ratio of .52 and a target debt-equity ratio of .45.

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To calculate the weighted average flotation cost we need to know the proportion of debt an... View the full answer

Principles of Finance

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