Yesteryear Productions Is Considering a Project with an Initial Start

question 26

Multiple Choice

Yesteryear Productions is considering a project with an initial start up cost of $960,000.The firm maintains a debt-equity ratio of 0.50 and has a flotation cost of debt of 6.8 percent and a flotation cost of equity of 11.4 percent.The firm has sufficient internally generated equity to cover the equity cost of this project.What is the initial cost of the project including the flotation costs?

• A)$979,417
• B)$982,265
• C)$992,386
• D)$1,038,513
• E)$1,065,089

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Definitions:

Clutch Shaft

A component in a vehicle's transmission system that connects the clutch to the gearbox, transmitting power from the engine to the transmission.

Pilot Bearings

Bearings that guide and support the end of the transmission input shaft within the crankshaft.

Clutch Pack

Apply/release mechanisms that typically consist of clutch plates, friction discs, and a pressure plate. In a mechanical clutch pack, the pressure plate is mechanically applied. As a component within an automatic transmission, a pressure plate uses tabs that mate with grooves in the clutch drum and is applied hydraulically or electrically.

Clutch Pedal

A mechanical lever found in manual vehicles that the driver depresses to disengage the gearbox from the engine, allowing for gear changes.