The BIM Corporation Has Decided to Build a New Facility

The BIM Corporation has decided to build a new facility for its R&D department. The cost of the facility is estimated to be $125 million. BIM wishes to finance this project using its traditional debt-equity ratio of 1.5. The issue cost of equity is 6% and the issue cost of debt is 1%. What is the total floatation cost?

A) $8.75 million.
B) $3.75 million.
C) $3.19 million.
D) $1.29 million.
E) $0.75 million.