The MFC Corporation Has Decided to Build a New Facility

question 54

Multiple Choice

The MFC Corporation has decided to build a new facility. The cost of the facility is estimated to be $9.7 million. MFC wishes to finance this project using its traditional debt-to- equity ratio of 1.5. The issue cost of equity is 6% and the issue cost of debt is 1%. What is the total floatation cost of raising funds?

• A) $300,000
• B) $100,000
• C) $600,000
• D) None of the above