Question: WSB Inc. is considering a project that will cost $2 million and will use the same mix of financing as the company uses now. Its

WSB Inc. is considering a project that will cost $2 million and will use the same mix of financing as the company uses now.

Its current capital structure looks like this:

Common Preferred Bonds

Market Value (in $ millions): 813 485 661

WSB is working with Goldman Sachs to raise the money for the project. Here is GS's fee structure:

Common Preferred Bonds

Flotation cost (%): 2.7 3.8 2

If WSB's board accepts the project, what are the expected investment banking fees WSB will pay Goldman Sachs?

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