When Flotation Costs Are Involved, a Project's Initial Investment Should

question 128

Multiple Choice

When flotation costs are involved, a project's initial investment should be computed as

• A) project investment + flotation costs.
• B) project investment x (1+ weighted average flotation costs.
• C) project investment/(1-weighted average flotation cost).
• D) project investment is unaffected, but the cost of capital must be adjusted for flotation costs.

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