Q. "Southern Alliance Industry needs to raise $45 million to start a new project and will raise the money by selling new bonds. The industry will generate no internal equity for the foreseeable future. The industry has a target capital structure of 65 percent common stock, 5 percent preferred stock and 30 percent debt. Flotation costs for issuing new common stock are 9 percent, for new preferred stock, 6 percent and for new debt, 3 percent. The true initial cost figure Southern should use when evaluating its project is tiny_mce_markerquot.