Flotation Costs Refer to The

question 12

Multiple Choice

Flotation costs refer to the:

• A) Initial costs incurred on day one of a new project.
• B) Interest rate imposed on the firm's debt.
• C) Required rate of return which is necessary for a project to be accepted.
• D) Dividends which shareholders expect when they purchase shares of the firm's stock.
• E) Costs incurred by a firm when new issues of securities are sold.

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Definitions:

Consolidated

The act of combining financial statements from different entities within a corporate group into one single set of statements.

Common Stock

A type of security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Additional Paid-In Capital

The amount of capital from shareholders that is more than the par value of the shares issued.

Retained Earnings

The portion of a company's profits that is kept or retained for reinvestment in the business, rather than distributed to shareholders as dividends.