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

question 61

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

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Definitions:

Finished Goods

Units of product that have been completed but not yet sold to customers.

Ending Balance

The amount of money in an account at the end of a financial period, after all additions and subtractions have been accounted for.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard hourly labor rate.

Labor Rate Variance

The difference between the actual hourly wage paid to workers and the standard or expected hourly wage.