Flotation Costs Are Incorporated into the APV Framework By

question 11

Multiple Choice

Flotation costs are incorporated into the APV framework by:

• A)adding them into 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)disregarding them.
• E)None of the above.

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Definitions:

Supplies

Supplies refer to items used in the regular operation of a business that are not directly part of finished goods.

Liabilities

Liabilities refer to the financial obligations of a business or an individual, encompassing all debts and amounts owed to others.

GAAP

Generally Accepted Accounting Principles, which are a set of rules and standards designated for accounting practices and financial reporting in the U.S.

Debts

Obligations of an entity arising from past transactions or events, requiring the entity to transfer assets or provide services to other entities in the future.