The firm maintains a debt-equity ratio

Assignment Help Operation Management

Reference no: EM13956200

Rodney Ruxin's Legal Services is raising capital to open a new law office in southern California. The project has an initial start up cost of $752,995. The firm maintains a debt-equity ratio of 0.50 and has a flotation cost of debt of 6.8 percent and a flotation cost of equity of 11.4 percent. The firm has sufficient internally generated equity to cover the equity cost of this project. What is the initial cost of the project including the flotation costs (enter your response as positive number, i.e. initial investment of $1 million as 1000000)?

Reference no: EM13956200

Questions Cloud

How would standards change for the science honors program : In this situation, what is the ?price? that determines how many students will apply to the honors program? Also, assume that the people who run the honors program do not plan to expand or contract it. Depict the demand and supply curves that repre..

What would the cash option payout be : The cash option amount is determined by discounting the winning amount at 7% over 20 years. This week the lottery is worth $6 million to a single winner. What would the cash option payout be?

Determine the? p-value for this test : Consider the hypotheses shown below. Given that x overbar = 113, σ=25?, n=48, α=.10?, complete parts a and b. Upper H 0H0?: μ=119 Upper H 1H1?: μ ≠119. What conclusion should be? drawn? Determine the? p-value for this test.

What is nominal rate of return on TIPS bond in first year : Consider a newly issued TIPS bond with a 3-year maturity, par value of $1,000, and coupon rate of 5.40%. Assume annual coupon payments. Time Inflation in Year Just Ended Par Value Coupon Payment + Principal Repayment = Total Payment 0 $ 1,000.00 1 3...

The firm maintains a debt-equity ratio : Rodney Ruxin's Legal Services is raising capital to open a new law office in southern California. The project has an initial start up cost of $752,995. The firm maintains a debt-equity ratio of 0.50 and has a flotation cost of debt of 6.8 percent and..

The closest pure-play firm for the proposed PSY division : Gangnam Corp is a South Korea-based music entertainment company, but is interested in launching a new line of clothes and sunglasses under the brand name PSY in hopes of becoming an international phenomenon. They have surveyed the clothing industry a..

Determine the optimal number of yards of material : The Sofaworld Company purchases upholstery material from Barrett Textiles. The company uses 45,000 yards of material per year to make sofas. The cost of ordering material from the textile company is $1,500 per order. It costs Sofaworld $0.70 per yard..

How much will he have to save each month in years : Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $28,500 per month for 25 years, with the first payment received 30 years and 1 month from now. If he can..

Compute the annual time-weighted yield rate of the stock : Arthur buys $2,000 worth of stock. Six months later, the value of the stock has risen to $2,200 and Arthur buys another $1,000 worth of stock. After another eight months, Arthur’s holdings are worth $2,700 and he sells off $800 of them. Ten months la..

User Account

All Pages