Flotation Costs Should

question 151

Multiple Choice

Flotation costs should:

• A) Be ignored when analyzing a project because they are not an actual cost of the project.
• B) Be averaged over the life of the project thereby reducing the cash flows for each year of the project.
• C) Only be considered when two projects have the same net present value.
• D) Be subtracted from the initial cost of a project before the net present value of the project is computed.
• E) Be included in project analysis as an additional initial cost of the project.

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Definitions:

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Sarbanes-Oxley Act

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