Zee's Toy Store Needs $242,000 for Expansion

question 54

Multiple Choice

Zee's Toy Store needs $242,000 for expansion.The firm has a target capital structure of 45 percent debt and 55 percent external equity.The flotation cost of debt is 5.2 percent compared to 8.5 percent for equity.What amount does the firm need to raise to fund the expansion?

• A)$301,773.00
• B)$299,716.00
• C)$260,257.03
• D)$233,333.33
• E)$286,111.75

---

Definitions:

Congress

The legislative body of a country, often bicameral, responsible for making laws, deciding on the national budget, and overseeing the government.

American Bar Association

The American Bar Association is a voluntary bar association of lawyers and law students which is not specific to any jurisdiction in the United States and is involved in setting academic standards for law schools and formulating ethical codes in the legal profession.

Habeas Corpus

A legal principle that allows individuals to challenge unlawful detention, requiring a court to review the legality of the detention.

Federal Writ

A legal order issued by a federal court or a judge.