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Compute total flotation cost

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The ABC Corporation has decided to build a new facility for its R&D department. The cost of the facility is estimated to be $125 million. ABC Corporation 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?

A. $0.75 million
B. $1.29 million
C. $3.19 million
D. $3.75 million
E. $8.75 million

 

Reference no: EM1360891

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