An Increase in Flotation Costs Will Most Likely Result in Which

Multiple Choice

An increase in flotation costs will most likely result in which of the following?

A) smaller dividend payments so that less external equity financing is needed
B) larger dividend payments so shareholders are able to earn their required returns
C) larger dividend payments to offset higher taxes paid by investors
D) no change in dividend policies because flotation costs are paid by purchasers of common stock