What Value Should You Assign as the Flotation Cost of Internally

question 36

Multiple Choice

What value should you assign as the flotation cost of internally generated equity financing?

• A)A cost that yields the company's required rate of return on the funds utilized
• B)Fifty percent of the external flotation cost of equity
• C)A cost of zero
• D)The same cost as that of the external equity financing
• E)The same cost as that of the debt financing

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Definitions:

Exudative

Pertaining to any fluid that filters from the circulatory system into lesions or areas of inflammation.

Traction

The application of a pulling force to a part of the body to realign or immobilize bones and joints.

Normal Aging

The natural process of bodily changes over time that are not caused by disease or avoidable environmental influences.