Higher Flotation Costs Will Result in All of the Following

question 10

Multiple Choice

Higher flotation costs will result in all of the following except:

• A) higher after-tax cost of debt
• B) higher weighted average cost of capital
• C) higher cost of retained earnings
• D) higher cost of common equity when new common shares are sold

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Definitions:

Marginal Unit

Refers to the additional or incremental unit of a good or service considered in analysis or decision-making.

Perfect Competition

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price-taking behavior.

Market Price

The existing rate at which an asset or service may be acquired or disposed of on the market.

Utility Consumption

The enjoyment or satisfaction gained by using a good or service.