Question

Trower Corp. has a debt-to-equity ratio of 0.85. The company is considering a new plant that will cost $145 million to build. When the company issues new equity, it incurs a flotation cost of 8 percent. The flotation cost on new debt is 3.5 percent.
What is the initial cost of the plant if the company raises all equity externally?
What if it typically uses 60 percent retained earnings? What if all equity investments are financed through retained earnings?


$1.99
Sales0
Views44
Comments0
  • CreatedJune 17, 2015
  • Files Included
Post your question
5000