Suppose the country of Altaria only produces one good, pink tutus. Last year, nominal GDP was $50,000 and this year it is $200,0
1 answer:
You might be interested in
Answer:<em>True cost = </em>
<em>= </em>
<em>= $ 13,669,821.2</em>
Explanation:
Given :
Debt-Equity ratio = 0.55
Flotation cost for new equity = 6%
Flotation cost for debt = 3 %
∴ To compute the weighted flotation cost , we'll use the following formula:
Weighted Flotation cost =
=
= 0.0387 + 0.0106
= 0.04934 or 4.93%
The true cost of building the new assembly line after taking flotation costs into account is evaluated using the following formula :
True cost =
=
= $ 13,669,821.2