Two-Foot Tools, Inc. sells and distributes work footwear and other clothing for people who work under extreme cold conditions such as in the Arctic or Antarctica. The company recently borrowed $10 million net of issuance costs equal to 1.5 percent of the total amount of funds borrowed from a consortium of banks and agreed to pay 9 percent interest before considering taxes of 30 percent. The cost of the new distribution facility is $20 million, and the remaining $10 million needed to finance the investment will come from prior years’ retained earnings. Given the firm’s plans, what should the initial outlay for the plant expansion be if flotation costs are accounted for by adjusting the initial outlay?

  • CreatedOctober 31, 2014
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