ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Examples of Floatation Costs Flotation costs include legal fees, certificate printing fees, registration fees, stock exchange listing fees, and underwriting fees.

Detailed explanation-2: -Flotation costs are costs a company incurs when it issues new stock. Flotation costs make new equity cost more than existing equity. Analysts argue that flotation costs are a one-time expense that should be adjusted out of future cash flows in order to not overstate the cost of capital forever.

Detailed explanation-3: -Flotation cost is the total cost incurred by a company in offering its securities to the public. It arises from expenses such as underwriting fees, legal fees and registration fees.

Detailed explanation-4: -Cost of capital represents the return a company needs to achieve in order to justify the cost of a capital project, such as purchasing new equipment or constructing a new building. Cost of capital encompasses the cost of both equity and debt, weighted according to the company’s preferred or existing capital structure.