Flotation Costs Are Incorporated into the APV Framework by

question 45

Multiple Choice

Flotation costs are incorporated into the APV framework by

• A)adding them to the all-equity value of the project.
• B)subtracting them from the all-equity value of the project.
• C)incorporating them into the WACC.
• D)Flotation costs should not be included into APV.

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Definitions:

Foreland Basin

A structural basin that forms adjacent to mountain ranges, resulting from the earth's crust flexing downward due to the weight of overlying mountains.

Normal Faults

Faults where the hanging wall moves downward relative to the footwall, typically caused by extensional forces.

Crust Thicken

The process by which the Earth's crust becomes thicker as a result of tectonic forces, volcanic activities, or sediment deposition.

Accretionary Prism

A triangular accumulation of sediment and rock peeled from the surface of a subducting tectonic plate and attached to the overlying plate at a convergent boundary between plates.