Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question

Ragubhai

Cookies 'n Cream, Incorporated, recently issued new securities to finance a new TV show. The project cost $14.1 million and the company paid $735,000 in flotation costs. In addition, the equity issued had a flotation cost of 7.1 percent of the amount raised, whereas the debt issued had a flotation cost of 3.1 percent of the amount raised. If the company issued new securities in the same proportion as its target capital structure, what is the company's target debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Debt-equity ratio
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Transcribed Image Text:Cookies 'n Cream, Incorporated, recently issued new securities to finance a new TV show. The project cost $14.1 million and the company paid $735,000 in flotation costs. In addition, the equity issued had a flotation cost of 7.1 percent of the amount raised, whereas the debt issued had a flotation cost of 3.1 percent of the amount raised. If the company issued new securities in the same proportion as its target capital structure, what is the company's target debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Debt-equity ratio
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