Your company estimates that the flotation cost to finance a project is 5 percent. When evaluating the
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Question:
Your company estimates that the flotation cost to finance a project is 5 percent. When evaluating the project's NPV, you should:
add 5 percent to the firm's WACC to get the discount rate for the project.
increase the project's discount by multiplying the firm's WACC by 1.05.
increase the project's discount rate by dividing the firm's WACC by (1 - 0.05).
multiply the project's start-up cost by 1.05.
divide the project's start-up cost by 0.95.
Related Book For
Fundamentals of Financial Management
ISBN: 978-1285867977
14th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date: