Suppose a New Project Was Going to Be Financed Partially

question 69

Multiple Choice

Suppose a new project was going to be financed partially with retained earnings. What flotation costs should you use for retained earnings?

• A) use the same flotation cost that would be used to issue new common stock
• B) use an average of the flotation costs for debt, preferred and common stock
• C) use the industry average flotation cost for common stock
• D) zero

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Definitions:

Transactional

Referring to a style of management or leadership that focuses on transactions or exchanges between leaders and followers, often involving rewards for performance.

Participative

Involving or characterized by participation; emphasizing or supporting the active involvement of people in decision-making or other processes.

Supportive

Providing encouragement, assistance, or comfort to others.

Charismatic

Refers to a personal attribute or quality that enables individuals to influence, inspire, and captivate others through their presence, speech, or actions.