Western Wear Is Considering a Project That Requires an Initial

question 95

Multiple Choice

Western Wear is considering a project that requires an initial investment of $274,000. The firm maintains a debt-equity ratio of 0.40 and has a flotation cost of debt of 7 percent and a flotation cost of equity of 10.5 percent. The firm has sufficient internally generated equity to cover the equity portion of this project. What is the initial cost of the project including the flotation costs?

• A)$279,592
• B)$281,406
• C)$288,005
• D)$297,747
• E)$302,762