One Way to Account for Flotation Costs of Raising Capital

question 6

Multiple Choice

One way to account for flotation costs of raising capital is to

• A) adjust all the project's cash flows so that each year it will reflect the flotation costs.
• B) adjust the project's initial cash flow so that it will reflect the flotation costs.
• C) adjust only the project's operating cash flows to account for paying back the shareholders.
• D) adjust the project's tax burden to account for the tax implications of raising capital.

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