What is the initial cost of the plant

Reference no: EM13300012

Trower Corp has a debt-equity ratio of 1.20. The Company is considering a new plant that wil cost $145 million to build. When the company issues new equity, it incurs a flotation cost of 8 percent. The flotation cost on a new debt is 3.5 percent. What is the initial cost of the plant if the company rases all equity externally? What is the initial cost of the plant if the company raises all equity externally? What if it typically uses 60 percent retained earnings? What is all equity investments are financed through retained earnings?

Reference no: EM13300012

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