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

Grasp the significance of the venture capitalist's exit strategy, financial strength, and success history on the decision-making process.

Identify the reasons behind the underpricing of IPOs.

Acknowledge the active role and expectations of venture capitalists in the management and ownership of financed firms.

Differentiate between private debt and equity in the context of venture capital and private placements.

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Definitions:

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