What is the true initial cost figure the company

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Reference no: EM131300412

Caughlin Company needs to raise $45 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, 5 percent preferred stock, and 40 percent debt. Flotation costs for issuing new common stock are 9 percent, for new preferred stock, 6 percent, and for new debt, 3 percent.

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

Reference no: EM131300412

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