GENERAL KNOWLEDGE

Detailed explanation-1: -Answer: (D) Increase the underlying money outpouring of the task. Explanation: floatation costs will be costs an organization brings about when it gives new stock. Floatation costs make new value cost more than the current value.

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: -payback period. The payback period is concerned with the amount of time it takes for a company to recoup the amount invested for an investment. The method does not consider the time value of money in the calculation.

Detailed explanation-4: -The payback period disregards the time value of money and is determined by counting the number of years it takes to recover the funds invested. For example, if it takes five years to recover the cost of an investment, the payback period is five years.

Detailed explanation-5: -A simple method of capital budgeting is the Payback Period. It represents the amount of time required for the cash ows generated by the investment to repay the cost of the original investment. For example, assume that an investment of $600 will generate annual cash ows of $100 per year for 10 years.