(Solved) : Photochronograph Corporation Pc Manufactures Time Series Photographic Equipment Currently Q33248528 . . . .

Photochronograph Corporation (PC) manufactures time seriesphotographic equipment. It is currently at its target debt-equityratio of .7. It’s considering building a new $70 millionmanufacturing facility. This new plant is expected to generateaftertax cash flows of $7.3 million in perpetuity. The companyraises all equity from outside financing. There are three financingoptions:

1. A new issue of common stock: The flotation costs of the newcommon stock would be 6.9 percent of the amount raised. Therequired return on the company’s new equity is 13 percent.

2. A new issue of 20-year bonds: The flotation costs of the newbonds would be 2.4 percent of the proceeds. If