Cost figure southern should use when evaluating its project

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Southern Alliance Company needs to raise $27 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, 9 percent preferred stock, and 26 percent debt. Flotation costs for issuing new common stock are 13 percent, for new preferred stock, 6 percent, and for new debt, 4 percent. What is the true initial cost figure Southern should use when evaluating its project?

Reference no: EM131185760

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