question archive Mahomes Manufacturing needs to raise $100 million to start a new project and will raise the money by selling new bonds
Mahomes Manufacturing needs to raise $100 million to start a new project and will raise the money by selling new bonds
Subject:FinancePrice: Bought3
- Mahomes Manufacturing needs to raise $100 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 40 percent common stock, 5 percent preferred stock, and 55 percent debt. Flotation costs for issuing new common stock are 6 percent, for new preferred stock, 4 percent, and for new debt, 3 percent. What is the true initial cost figure the company should use when evaluating its project?
