Which of the Following Statements Is False Regarding Flotation Costs

question 44

Multiple Choice

Which of the following statements is false regarding flotation costs?

• A)It is easier to account for flotation costs by treating them as negative cash flows
• B)They increase the required rate of return
• C)They are the costs of issuing new securities
• D)They involve real money

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Definitions:

Return on Investment

A financial ratio used to evaluate the efficiency or profitability of an investment, calculated by dividing the benefit (return) of an investment by the cost of the investment.

Investment Centres

Business segments or units within an organization that are responsible for their own revenues, expenses, and asset investments.

Performance Evaluation

The systematic assessment of an employee, process, or organization's performance, usually against set objectives or criteria.

Return on Equity

A measure of financial performance calculated by dividing net income by shareholder equity, indicating how efficiently a company uses its equity to generate profit.