You are the CFO of 'Greentech Innovations, a mid - sized company specializing in renewable energy products.
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Question:
You are the CFO of 'Greentech Innovations, a midsized company specializing in renewable energy products. The company is exploring a significant expansion project requiring substantial capital investment. As part of your role, you must consider various factors in capital budgeting, including flotation costs.
How do you incorporate these costs into the project's evaluation?
Share an example, either hypothetical or from your professional experience, illustrating the impact of flotation costs on the decisionmaking process for a capital budgeting project.
In response to your peers, critically evaluate the methods and approaches shared for including flotation costs in capital budgeting by discussing the potential risks and benefits of different approaches and how these might affect the overall assessment of a project's viability. Encourage the exploration of how different types of companies eg startups vs established corporations might approach flotation costs differently and the implications of these approaches.
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