Southern Alliance Company needs to raise $26 million to start a new project and will...
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Finance
Southern Alliance Company needs to raise $26 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% common stock, 10% preferred stock, and 30% debt. Flotation costs for issuing new common stock are 14%, for new preferred stock, 6%, and for new debt, 4%. What is the true initial cost figure Southern should use when evaluating its project? (Do not round)
Multiple Choice
A. $23,920,000
B. $27,795,100
C. $28,652,000
D. $30,111,358
E. $28,953,229
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