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:

Fertilization

The process of combining male (sperm) and female (ovum) gametes to form a zygote, initiating embryonic development in sexually reproducing organisms.

Sporogenesis

The process of spore formation, especially in fungi, algae, mosses, and ferns.

Bacteria

Single-celled microorganisms that can exist either as independent organisms or as parasites, some of which can cause diseases.

Asexually

Reproduction without the combination of genetic material from two different parents, resulting in offspring that are genetically identical to the parent.