Lucas corp. has a debt-equity ratio of .9. the company is considering a new plant that will cost $113 million to build. when the company issues new equity, it incurs a flotation cost of 8.3 percent. the flotation cost on new debt is 3.8 percent.

a. what is the initial cost of the plant if the company raises all equity externally?
i. what is the initial cost of the plant if the company typically uses 60 percent retained earnings? ii. what is the initial cost of the plant if the company typically uses 100 percent retained earnings?

Which of the following is not a potential problem with beta and its estimation? sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different than the "true" or "expected future" beta. the beta of "the market," can change over time, sometimes drastically.

Which of the following statements about brand names is true? brand names give the seller an incentive to provide consistently high-quality products and services in order to protect the reputation of the brand. brand names are always economically wasteful since they dupe consumers into buying more expensive goods and services that are no different from generic versions. it is always rational to prefer brand names over generic substitutes. read the following example and determine whether it illustrates a common critique or defense of advertising. musashi sees a commercial for a brand x clothing company that depicts the wearers of the clothes out having a good time with friends. although he doesn't particularly need new clothes, the commercial prompts him to buy a brand x t-shirt.

Which of the following is not a consideration when determining your asset allocation