The Flotation Cost for a Firm Is Computed As

Multiple Choice

The flotation cost for a firm is computed as:

A) the arithmetic average of the flotation costs of both debt and equity.
B) the weighted average of the flotation costs associated with each form of financing.
C) the geometric average of the flotation costs associated with each form of financing.
D) one-half of the flotation cost of debt plus one-half of the flotation cost of equity.
E) a weighted average based on the book values of the firm's debt and equity.