Flotation Costs for a Levered Firm Should Be

question 72

Multiple Choice

Flotation costs for a levered firm should be:

• A) ignored when analyzing a project because they are a sunk cost.
• B) spread over the life of a project thereby reducing the cash flows for each year of the project.
• C) considered only when two projects are mutually exclusive.
• D) weighted and included in the initial cash flow.
• E) totally ignored when internal equity funding is utilized.

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