FLOTATION COSTS

Complete Study Problem - Flotation costs



Flotation Costs and Issue Size

Introduction

Floatation cost is that cost which is incurred on the newly issued securities by the publicly traded company. This cost comprises of expenses like registration fees, legal fees, underwriting fees, and other costs like this. The consideration of these fees by the company has an impact on the capital raise from a new issue. In this paper we will see D. Butler Inc flotation costs needed to raise $14 million.

Discussion

Needs to raise $14 million

Stock Market price = $95

Flotation costs are 10 percent of the market price

By the above figures: ...