The Flotation Cost for a Firm Is Computed As

question 251

Multiple Choice

The flotation cost for a firm is computed as:

• A) The arithmetic average of the flotation costs of both debt and equity.
• B) The weighted average of the flotation costs associated with each form of financing.
• C) The geometric average of the flotation costs associated with each form of financing.
• D) One-half of the flotation cost of debt plus one-half of the flotation cost of equity.
• E) A weighted average based on the book values of the firm's debt and equity.

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