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

question 123

Multiple Choice

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