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You Are Evaluating a Project That Requires $324,000 in External

Question 1

Multiple Choice

You are evaluating a project that requires $324,000 in external financing. The flotation cost of equity is 8.4 percent and the flotation cost of debt is 5.1 percent. What is the initial cost of the project including the flotation costs if you maintain a debt-equity ratio of .35?


A) $352,842
B) $349,021
C) $350,439
D) $355,551
E) $346,646

Correct Answer:

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