Question

Breckinridger Corp. has a debt-equity ratio of .85. The company is considering a new plant that will cost $107 million to build. When the company issues new equity, it incurs a flotation cost of 7.7 percent. The flotation cost on new debt is 3.2 percent. |

a. |
What is the initial cost of the plant if the company raises all equity externally? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) |

b. | What is the initial cost of the plant if the company typically uses 65 percent retained earnings? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) |

c. | What is the initial cost of the plant if the company typically uses 100 percent retained earnings? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) |

Answer #1

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Breckinridger Corp. has a debt-equity ratio of .85. The company
is considering a new plant that will cost $104 million to build.
When the company issues new equity, it incurs a flotation cost of
7.4 percent. The flotation cost on new debt is 2.9 percent. a. What
is the initial cost of the plant if the company raises all equity
externally? (Do not round intermediate calculations and enter your
answer in dollars, not millions of dollars, rounded to the nearest...

Breckinridger Corp. has a debt-equity ratio of .90. The company
is considering a new plant that will cost $113 million to build.
When the company issues new equity, it incurs a flotation cost of
8.3 percent. The flotation cost on new debt is 3.8 percent.
a.
What is the initial cost of the plant if the company raises all
equity externally? (Do not round intermediate calculations
and enter your answer in dollars, not millions of dollars, rounded
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e.g., 1,234,567. Do not round intermediate calculations and round
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1)What is the initial cost of the plant if the company raises
all equity externally?(Enter your answer in dollars, not
millions of dollars, e.g., 1,234,567. Do not round intermediate
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considering a new plant that will cost $104 million to build. When
the company issues new equity, it incurs a flotation cost of 7.4
percent. The flotation cost on new debt is 2.9 percent. What is the
initial cost of the plant if the company raises all equity
externally? (Enter your answer in dollars, not millions of dollars,
e.g., 1,234,567. Do not round intermediate calculations and round
your answer...

Sheaves Corp. has a debt−equity ratio of .8. The company is
considering a new plant that will cost $103 million to build. When
the company issues new equity, it incurs a flotation cost of 7.3
percent. The flotation cost on new debt is 2.8 percent.
What is the weighted average flotation cost if the company
raises all equity externally? (Enter your answer as a
percent and round to two decimals.)
Flotation Cost
%
What is the initial cost of the...

Trower Corp. has a debt–equity ratio of .90. The company is
considering a new plant that will cost $113 million to build. When
the company issues new equity, it incurs a flotation cost of 8.3
percent. The flotation cost on new debt is 3.8 percent.
What is the initial cost of the plant if the company raises all
equity externally? (Enter your answer in dollars, not
millions of dollars, e.g., 1,234,567. Do not round intermediate
calculations and round your answer...

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considering a new plant that will cost $105 million to build. When
the company issues new equity, it incurs a flotation cost of 7.5
percent. The flotation cost on new debt is 3 percent.
What is the initial cost of the plant if the company raises all
equity externally? (Enter your answer in dollars, not
millions of dollars, e.g., 1,234,567. Do not round intermediate
calculations and round your answer...

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initial cost of the plant if the company raises all equity
externally? What if it typically uses 60 percent retained earnings?
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considering a new plant that will cost $103 million to build. When
the company issues new equity, it incurs a flotation cost of 7.3
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What is the initial cost of the plant if the company raises all
equity externally?
What is the initial cost of the plant if the company typically
uses 55 percent retained earnings?
What is the...

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