What is the total flotation cost

Assignment Help Financial Management

Reference no: EM13927896

The BIM Corporation has decided to build a new facility for its R&D department. The cost of the facility is estimated to be $125 million. BIM wishes to finance this project using its traditional debt-equity ratio of 1.5. The issue cost of equity is 6% and the issue cost of debt is 1%. What is the total flotation cost?

Reference no: EM13927896

Questions Cloud

Issued for each share of outstanding stock : You currently own 5 percent of the 2 million outstanding shares of Webster Mills. The company has just announced a rights offering with a subscription price of $40. One right will be issued for each share of outstanding stock.

Effective annual interest rate on this leading arrangement : You've worked out a line of credit arrangement that allows you to borrow up to $40 million at any time. The interest rate is .56 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a non-interest-bearing accou..

Quarters forecast sales : The Thakor Corporation’s purchases from suppliers in a quarter are equal to 70 percent of the next quarter’s forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 30 percent of sales, and interest and dividends are $80 ..

Project with an initial investment : Calculate the NPV for a 30 year project with an initial investment of 35000 and cash inflow of 8000 per year. Assume that the firm has an opportunity cost of 13%. the projects NPV is ?

What is the total flotation cost : The BIM Corporation has decided to build a new facility for its R&D department. The cost of the facility is estimated to be $125 million. BIM wishes to finance this project using its traditional debt-equity ratio of 1.5. The issue cost of equity is 6..

Firm to value their capital budgeting projects : The flow-to-equity approach has been used by the firm to value their capital budgeting projects. The total investment cost at time 0 is $640,000. The company uses the flow-to-equity approach because they maintain a target debt to value ratio over pro..

What is the firms cost of equity : Chelsea fashions is expected to pay an annual dividend of $0.80 a share next year. the market price of the stock is $22.40 and the growth rate is 5%. what is the firm's cost of equity?

What is the incremental annual cash flow : Daily Enterprises is contemplating the acquisition of some new equipment. The purchase price is $33,000. The equipment has a 4-year life. The equipment can be leased for $9,000 a year. The firm can borrow money at 7 percent and has a 35 percent tax r..

What rop will provide a lead time service level : What is the EOQ? What ROP will provide a lead time service level of 96 percent?

User Account

All Pages