Suppose a New Project Was Going to Be Financed Partially

question 113

Multiple Choice

Suppose a new project was going to be financed partially with retained earnings.What flotation costs should you use for retained earnings?

• A) Use the same flotation cost that would be used to issue new common stock
• B) Use an average of the flotation costs for debt, preferred and common stock
• C) Use the industry average flotation cost for common stock
• D) Zero

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