Retlaw Corporation (RC) manufactures time-series photographic equipment. It is currently at its target debt-equity ratio of considering building a new $46 million manufacturing facility. This new plant is expected to generate after-tax cash flows of million in perpetuity. The company raises all equity from outside financing. There are three financing options: 1. A new issue of common stock: The flotation costs of the new common stock would be 8% of the amount raised. The requ on the company's new equity is 16%. 2. A new issue of 20-year bonds: The flotation costs of the new bonds would be 4% of the proceeds. If the company issues bonds at an annual coupon rate of 8.0%, they will sell at par. 8. Increased use of accounts payable financing: Because this financing is part of the company's ongoing daily business, it h flotation costs, and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ra accounts payable to long-term debt of 0.140. (Assume there is no difference between the pre-tax and after-tax accounts cost.)

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