Help! so is this suggesting “external equity” is debt? and can you help calculate it?
Fo = S/V * fS + B/V * fB this is the formula the book is using.. thank you
a company has a debt-equity ratio of .75. The company is considering a new plant that will cost $125 million to build. When the company issues new equity, it incurs a flotation cost of 10%. The flotation cost on new debt is 4%. What is the initial cost of the plant if the company raises all equity externally?