Cully Company needs to raise $45 million to start a new project and will raise the...

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Finance

Cully Company needs to raise $45 million to start a new projectand will raise the money by selling new bonds. The company willgenerate no internal equity for the foreseeable future. The companyhas a target capital structure of 60 percent common stock, 5percent preferred stock, and 35 percent debt. Flotation costs forissuing new common stock are 7 percent, for new preferred stock, 4percent, and for new debt, 2 percent. What is the true initial costfigure the company should use when evaluating its project? (Do notround intermediate calculations and enter your answer in dollars,not millions, rounded to the nearest whole dollar amount, e.g.,1,234,567.)

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Cully Company needs to raise $45 million to start a new projectand will raise the money by selling new bonds. The company willgenerate no internal equity for the foreseeable future. The companyhas a target capital structure of 60 percent common stock, 5percent preferred stock, and 35 percent debt. Flotation costs forissuing new common stock are 7 percent, for new preferred stock, 4percent, and for new debt, 2 percent. What is the true initial costfigure the company should use when evaluating its project? (Do notround intermediate calculations and enter your answer in dollars,not millions, rounded to the nearest whole dollar amount, e.g.,1,234,567.)