1. You own 2,500 shares of Googly Eyes stock. The company has just announced that it is issuing additional shares of stock. You also learned that you are given a chance to purchase some of these additional shares prior to the shares being offered to the general public. This type of an offer is called:

Firm commitment offer.

Best efforts offer.

General cash offer.

Priority offer.

Rights offer.

2. A company needs to raise $460,000 in external financing. The associated cost of raising capital is as follows: the flotation costs of equity and debt are 10.4 percent and 5.7 percent, respectively. The company would like to maintain the debt-to-equity ratio of .40. Calculate the initial cost of the project that reflects the flotation costs.

$555,551

$505,812

$502,842

$546,646

$549,021