Suppose your company needs $ 1 1 million to build a new assembly line. Your target debt
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Question:
Suppose your company needs $ million to build a new assembly line. Your target debtequity ratio is The flotation cost for new equity is percent, but the flotation cost for debt is only percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small.
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