Cost figure the company should use when evaluating project

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Reference no: EM132032116

Caughlin Company needs to raise $70 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 70 percent common stock, 15 percent preferred stock, and 15 percent debt. Flotation costs for issuing new common stock are 10 percent, for new preferred stock, 7 percent, and for new debt, 2 percent. What is the true initial cost figure the company should use when evaluating its project?

Reference no: EM132032116

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