Welsh Corporation wants to raise capital to invest in a new project. The capital investment in the project is estimated at $525,000. The firm plans to raise the needed funds by issuing new debt. It is required to pay its investment banker 5 percent of the issue's total value. How much debt does the firm need to issue?

Question

Quizplus · Accepted Answer

To cover the investment banker's fee of 5%, the firm needs to issue more than $525,000. The equation is: $525,000 / (1 - 0.05) = $552,632.

Welsh Corporation Wants to Raise Capital to Invest in a New