New project and will raise money by selling new bonds

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Reference no: EM131613365

Southern Alliance Company needs to raise $22 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 60 percent common stock, 9 percent preferred stock, and 31 percent debt. Flotation costs for issuing new common stock are 9 percent, for new preferred stock, 7 percent, and for new debt, 5 percent. What is the true initial cost figure Southern should use when evaluating its project? (Do not round your intermediate calculations.)

$22,852,196

$20,460,000

$23,804,371

$24,756,546

Reference no: EM131613365

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