What is the true initial cost figure the company should use

Assignment Help Finance Basics

Reference no: EM13266063

Caughlin Company needs to raise $65 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 65 percent common stock, 10 percent preferred stock, and 25 percent debt. Flotation costs for issuing new common stock are 9 percent, for new preferred stock, 6 percent, and for new debt, 4 percent.

What is the true initial cost figure the company should use when evaluating its project?

Reference no: EM13266063

Questions Cloud

What is the value of this endowment in today dollars : The first $4M will start today; at the end of 5 years, the hospital will also receive a lump sum payment of $18M. Assuming the cost of money is 3%, what is the value of this endowment in today's dollars?

What is the magnitude of the downward force : To balance a very light rod when a down force is applied at a point 0.77m to the left of a supporting fulcrum (pivot point), What is the magnitude of the downward force

What was last year dividend per share : Fauver Enterprises declared a 3-for-1 stock split last year, and this year its dividend is $1.50 per share. This total dividend payout represents a 6% increase over last year's pre-split total dividend payout. What was last year's dividend per sha..

What is the average power produced by the laser : A mode-locked, titanium-sapphire laser has a wavelength of 850 nm and produces 100 million pulses of light each second. What is the average power produced by the laser

What is the true initial cost figure the company should use : What is the true initial cost figure the company should use when evaluating its project?

Evidence-based project-paper on diabetes : Based on the summary of research findings identified from the Evidence-Based Project-Paper on Diabetes that describes a new diagnostic tool

What is the expected return on the portfolio : You own a portfolio that is 38 percent invested in Stock X, 22 percent in Stock Y, and 40 percent in Stock Z. The expected returns on these three stocks are 10 percent, 15 percent, and 12 percent, respectively. What is the expected return on the p..

Compute the work done on the gas : Gas in a container is at a pressure of 1.1 atm and a volume of 6.0 m3. What is the work done on the gas if it expands at constant pressure to twice its initial volume

What will the output voltage be for a strain of 1000 : A resistor on a Wheatstone bridge is replaced with a strain gage which has a nominal resistance of 120 Ohms and a gage factor of 2.06. The remaining resistors on this quarter-bridge Wheatstone bridge circuit are 120 Ohm fixed resistors.

User Account

All Pages