Caughlin Company needs to raise $60 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 50 percent common stock, 5 percent preferred stock, and 45 percent debt. Flotation costs for issuing new common stock are 10 percent, for new preferred stock, 7 percent, and for new debt, 3 percent.
What is the true initial cost figure the company should use when evaluating its project?