Yesteryear Productions Is Considering a Project with an Initial Start

Yesteryear Productions is considering a project with an initial start up cost of $960,000.The firm maintains a debt-equity ratio of 0.50 and has a flotation cost of debt of 6.8 percent and a flotation cost of equity of 11.4 percent.The firm has sufficient internally generated equity to cover the equity cost of this project.What is the initial cost of the project including the flotation costs?

A) $979,417
B) $982,265
C) $992,386
D) $1,038,513
E) $1,065,089

Correct Answer:

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