Trower Corp. has a debt-equity ratio of .65. The company is considering a new plant that will
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Trower Corp. has a debt-equity ratio of .65. 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 7 percent. The flotation cost on new debt is 2.5 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?
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Related Book For
Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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