Problemgoodbye inc recently issued new securities to, Ask an Expert

Finance

Problem:

Goodbye, Inc., recently issued new securities to finance a new TV show. The project cost $3 million, and the company paid $171,000 in flotation costs. In addition, the equity issued had a flotation cost of 8 percent of the amount raised, whereas the debt issued had a flotation cost of 2 percent of the amount raised.

Required:

If Goodbye issued new securities in the same proportion as its target capital structure, what is the company's target debt-equity ratio?

Note: Please provide reasons to support your answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162166

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