“Calculating Flotation Costs Suppose your company needs $20 million to build a new assembly line. Your target debt-equity ratio is .
“Calculating Flotation Costs Suppose your company needs $20 million to builda new assembly line. Your target debt-equity ratio is .75. The flotation cost fornew equity is 8 percent, but the flotation cost for debt is only 4 ercent. Yourboss has decided to fund the project by borrowing money, because the flotationcosts are lower and the needed funds are relatively small.a. What do you think about […]