The Lingo Co. has a debt-equity ratio of.60. The firm is analyzing a new project which requires an initial cash outlay of $450,000 for new equipment. The flotation cost for new equity is 10 % and for debt 5 %. What is the initial cost of the project including the flotation costs?

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The project is financed with 60% debt and 40% equity. The flotation cost for debt is 5% and for equity is 10%. The initial cost including flotation costs is calculated as: (0.60 * $450,000 / (1 - 0.05)) + (0.40 * $450,000 / (1 - 0.10)) = $489,796.