Best Answer

Your company is considering a project that will cost $1 million.The project will generate after-tax cash flows of $250,000 per year for 7 years. The WACC is 15% and the firm's target D/E ratio is .6 The flotation cost for equity is 5% and the flotation cost for debt is 3%. What is the NPV for the project after adjusting for flotation costs?

fA = (E/V) x fE + (D/V) x fD

fA = (.375)(3%) + (.625)(5%) = 4.25%

PV of future cash flows = 1,040,105

NPV = 1,040,105 -1,000,000/(1-.0425) = -4,281

User Avatar

Wiki User

15y ago
This answer is:
User Avatar

Add your answer:

Earn +20 pts
Q: What are the formulae involving the calculation of flotation cost?
Write your answer...
Still have questions?
magnify glass
Related questions

how do you formulae use Calculation For Contact Form 7?

This plugin in you can be using any kind of calculators like weight calculation, hotel booking quote, car renting calculation, mortgage calculator, cost calculator, finance calculator, tax calculator, and many others. You can do your form in summation, multiplication, deduction, and division as well as many other formulae.

What is the formulae of cp if profit and discount percent is given?

if profit , discount % and cost price is given write the formulae to fine cost price

If the flotation cost goes up the cost of retained earnings will?

go up

If flotation cost go down the cost of new preferred stock will go up or down?

go down

What is the meaning of the calculation?


What is a Food cost percentage?

It is a calculation that determines the % of cost to sales.

Cost implications of management decisions involving distributions?

the cost implication of management decision involving distribution

What is the formulae for loss percentage?

% loss = amount of loss / cost x 100

When determining the after tax cost of a bond the face value of the issue must be adjusted to the net proceeds amounts by considering what?

the flotation cost

When calculation the inventory turnover at cost the first step is to calculate the?

Cost of goods sold

Application of mathimatics in petroleum engineering?

Production of petroleum , calculation of consumption and calculation of cost every thing was incomplete without mathematics.

What is formula of food cost calculation?

Cost of goods less inventory divided by Gross Food Sales