The wacc assumes that the components weights

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Reference no: EM132042395

1. Southern Alliance Company needs to raise $27 million to start a new project. The company has a target capital structure of 60 percent common stock, 11 percent preferred stock, and 29 percent debt. Flotation costs for issuing new common stock are 11 percent, for new preferred stock, 8 percent, and for new debt, 4 percent. What is the true initial cost figure Southern should use when evaluating its project?

a) $30,735,552

b) $28,371,278

c) $29,332,800

d) $29,553,415

e) $24,930,000

2. The WACC assumes that the components weights are based on:

a. Historical data

b. Target %

c. Book value

d. Market value

Reference no: EM132042395

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