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Flotation Costs Medina Corp has a debt-equity ratio of 75 The company is considering a new plant that will cost $125 million to build When the company issues new equity it incurs a flotation

Flotation Costs: Medina Corp. has a debt-equity ratio of .75. The company is considering a new plant that will cost $125 million to build. When the company issues new equity, it incurs a flotation cost of 10%. The flotation cost on new debt is 4%.

What is the initial cost of the plant if the company raises all equity externally?

 

Apr 06 2020 View more View Less

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