What is the dollar flotation cost for the proposed financing

Assignment Help Accounting Basics
Reference no: EM132043317

Question - A firm needs to purchase equipment for its 2,000 drive-ins nationwide. The total cost of the equipment is $2 million. It is estimated that the after tax cash inflows from the project will be $210,000 annually in perpetuity. The market value debt-to-assets ratio is 40%. The firm's cost of equity is 13%, its pretax cost of debt is 8%, and the flotation costs of debt and equity are 2% and 8%, respectively. The tax rate is 34%. Assume the project is of similar risk to the firm's existing operations.

What is the dollar flotation cost for the proposed financing?

Reference no: EM132043317

Questions Cloud

How can the shannon-weaver communications model be applied : Much of health assessment, planning, evaluation, and policy making depend on communication. How can the Shannon-Weaver communications model be applied to these?
Describe the two idps detection approaches : Describe the two IDPS detection approaches and discuss the advantages and disadvantages both.
How can a corporations life cycle be extended : For this essay, use the COCA COLA company, and analyze how the company has implemented a corporate strategy or a future policy rollout.
Explain the concept boolean : Explain the concept "Boolean". Give some examples ofhow and when you use two structures
What is the dollar flotation cost for the proposed financing : A firm needs to purchase equipment for its 2,000 drive-ins nationwide. What is the dollar flotation cost for the proposed financing
Evaluate the different types of data : Evaluate the different types of data and/or information consumed by health care organizations as it relates to patient health technology.
How the designers have made the bending theory work : Comment on how the designers have made the bending theory work and what novel ideas might have been used
How much on conventional practices : Additionally, how much of the choice should be based on personal preference and how much on conventional practices?
Explain the strategic decisions and compensation practices : Discuss the relationship between the strategic decisions and compensation practices of your current or former organization.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd