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:

African-American Sports Heroes

Prominent African-American athletes who have made significant contributions to their sports and who often broke racial barriers in the process.

Athletic Prowess

Describes an individual's exceptional skill, ability, or strength in sports and physical activities.

Intellectual Inferiority

refers to the perception or belief that certain individuals or groups have lower cognitive abilities compared to others.

Step-variable

Costs that remain fixed over small ranges of production or activity levels but can change with larger shifts in activity.