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3 votes
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 percent. The flotation cost on new debt is 4 percent. What is the initial cost of the plant if the company raises all equity externally?

asked
User Suzane
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7.8k points

1 Answer

5 votes

Answer:

$131.875 Million

Step-by-step explanation:

Please see attachment .

Medina Corp. has a debt-equity ratio of .75. The company is considering a new plant-example-1
answered
User Indya
by
8.6k points
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