Cost figure company should use when evaluating its project

Assignment Help Financial Management

Reference no: EM131597806

Caughlin Company needs to raise $40 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 55 percent common stock, 15 percent preferred stock, and 30 percent debt. Flotation costs for issuing new common stock are 6 percent, for new preferred stock, 3 percent, and for new debt, 1 percent.

What is the true initial cost figure the company should use when evaluating its project? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount, e.g., 32.)

Initial cost $

Reference no: EM131597806

Questions Cloud

Calculate the constant monthly mortgage payments on loan : Calculate the constant monthly mortgage payments on this loan, assuming it is to be fully amortized at the end of 3 years.

What is the difference between diversity and inclusion : What are the dimensions of cultural diversity? Identify and briefly explain the dimensions by referencing the text.

What is your best estimate of the company cost of equity : If the stock sells for $36 per share, what is your best estimate of the company’s cost of equity?

Implement the sieve of eratosthenes : Implement the Sieve of Eratosthenes and use it to find all prime numbers less than or equal to one million. Use the result to prove Goldbach's Conjecture

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

How ntsb party process assists ntsb in investigative process : Explain the NTSB Party Process and how it assists the NTSB in the investigative process. Detail the limits, specifications, and reasons behind the process.

Create a staffing plan for individuals with disabilities : The reporting structure for the staff members (Who provides supervision? How many employees report to each supervisor? etc).

How different was this decline from the major decline : How different was this decline from the major decline in the 1930s? What are some differences between the two? Why?

Changes on the difference between profits and cash flow : During the last year of operations, What is the total impact of these changes on the difference between profits and cash flow?

User Account

All Pages