Trower Corp. has a debt?equity ratio of 0.85. The company is considering a new p
ID: 2635771 • Letter: T
Question
Trower Corp. has a debt?equity ratio of 0.85. The company is considering a new plant that will cost $120 million to build. When the company issues new equity, it incurs a flotation cost of 9.0 percent. The flotation cost on new debt is 4.5 percent.
What is the initial cost of the plant if the company raises all equity externally? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
What is the initial cost of the plant if the company typically uses 65 percent retained earnings? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
What is the initial cost of the plant if the company typically uses 100 percent retained earnings? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
Trower Corp. has a debt?equity ratio of 0.85. The company is considering a new plant that will cost $120 million to build. When the company issues new equity, it incurs a flotation cost of 9.0 percent. The flotation cost on new debt is 4.5 percent.
Explanation / Answer
Trower Corp. has a debt?equity ratio of 0.85. The company is considering a new plant that will cost $120 million to build. When the company issues new equity, it incurs a flotation cost of 9.0 percent. The flotation cost on new debt is 4.5 percent.
What is the initial cost of the plant if the company raises all equity externally? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
Initial cash flow $ 128,509,385
What is the initial cost of the plant if the company typically uses 65 percent retained earnings? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
Initial cash flow $ 122,978,285
What is the initial cost of the plant if the company typically uses 100 percent retained earnings? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
Initial cash flow $ 120,000,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.