Show work Trower Corp. has a debt-equity ratio of .85. The company is considerin

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Trower Corp. has a debt-equity ratio of .85. The company is considering a new plant that will cost $114 million to build. When the company issues new equity, it incurs a flotation cost of 8.4 percent. The flotation cost on new debt is 3.9 percent. What is the initial cost of the plant if the company raises all equity externally? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Initial cash flow 121,707,014 What is the initial cost of the plant if the company typically uses 65 percent retained earnings? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Initial cash flow $117,989,314 What is the initial cost of the plant if the company typically uses 100 percent retained earnings? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Initial cash flow 116,080,029

Explanation / Answer

Initial cost of the plant if the company raises all equity externally :- That is = Cost of the Plant * (1+Flotation Cost) That is = 114*1000000*(1+0.084) That is = $ 123,576,000 /-

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