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Suppose your firm needs to raise $10.5 million to construct a new shipping terminal. As CFO, you plan to raise funds in the following manner:

a. 60% of the funds will be raised by selling long term debt (bonds)

b. 40% of the funds will be raised by retaining operating earnings.

For a debt issue, 2.5% of the amount raised will be kept by the Investment Banker, as gross spread. How much capital will you need to raise in order to build your shipping terminal?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91750185

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