Being Human, Inc., recently issued new securities to finance a new TV show. The project cost $14.5 million, and the company paid $775,000 in flotation costs. In addition, the equity issued had a flotation cost of 7.5 percent of the amount raised, whereas the debt issued had a flotation cost of 3.5 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., .1616.)
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Ответ:
1.54
Explanation:
Based on the information given in the question, the company’s target debt-equity ratio will be:
The total costs will be:
= $14.5 million + $775000
= $15.275 million
Since amount needed = amount raised × (1-fT)
Therefore, 15.275 × (1-f) = 14.5
15.275 - 15.275f = 14.5
f = floatation costs = 5.074%
Therefore, 5.074% × (1 + D/E) = 7.5% + (D/E) × 3.5%
Solving for debt-equity ratio, the value will be = 1.54
Ответ:
Through Emphasizing historical events in African American history and make statements of empowerment.
Explanation: