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Business, 06.05.2020 02:37 mroueh21

Cully Company needs to raise $80 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 50 percent common stock, 10 percent preferred stock, and 40 percent debt. Flotation costs for issuing new common stock are 12 percent, for new preferred stock, 9 percent, and for new debt, 4 percent.
Required:
a) What is the true initial cost figure the company should use when evaluating its project?

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