Suppose ALK Co

question 82

Multiple Choice

Suppose ALK Co. needs $13.8 million to build a new assembly line. The target debt-equity ratio is .48. The flotation cost for new equity is 9.6 percent, but the floatation cost for debt is only 5.1 percent. What is the true cost of building the new assembly line after taking flotation costs into account?

• A) $17,306,191
• B) $15,022,949
• C) $16,318,414
• D) $15,719,310
• E) $16,666,667

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Definitions:

Change Competency

The capability to effectively manage and adapt to alterations in the environment, processes, technology, or organizational structure.

Franchising

A business strategy in which a brand and business model are licensed by a franchisee from the franchisor for the establishment and operation of a new branch.

Chinese Businesses

Enterprises that are based in China, encompassing both domestic and international operations, and influenced by Chinese culture, economic policies, and market dynamics.

Mechanistic Organization

A mechanistic organization is a highly structured, rigid, and bureaucratic type of organization which operates under a strict hierarchy and tight control.