Southern alliance company needs to raise 27 million to

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Southern Alliance Company needs to raise $27 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 55 percent common stock, 10 percent preferred stock, and 35 percent debt. Flotation costs for issuing new common stock are 14 percent, for new preferred stock, 6 percent, and for new debt, 2 percent.

Required:

What is the true initial cost figure Southern should use when evaluating its project? (Do not include the dollar sign ($). Do not round the weighted average floatation cost. Round your answer to the nearest whole dollar amount. (e.g., 1,234,567))

Reference no: EM13597743

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