Initial cost of plant company raises all equity externally

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Reference no: EM131566217

Sheaves Corp. has a debt−equity ratio of .9. 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?

What is the initial cost of the plant if the company typically uses 60 percent retained earnings?

What is the initial cost of the plant if the company typically uses 100 percent retained earnings?

Reference no: EM131566217

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