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Sagot :
The costs associated with issuing new securities are referred to as floating costs. Underwriting costs, legal fees, brokerage fees, registration fees, and others are included in floating cost.
The following is how the ratio of debt to capital is calculated:
Equity/debt = total debt divided by total shareholder equity.
0.54 = debt /1
debt = 0.54
How is the price of flotation determined?
The flotation cost is the difference between the cost of new equity and the cost of existing equity, which is (20.7-20.0%) = 0.7 percent. To put it another way, the new equity issuance cost 0.7% more due to the costs of the flotation.
How much, for instance, does flotation cost?
Legal fees, certificate printing fees, registration fees, stock exchange listing fees, and underwriting fees are examples of flotation costs.
To learn more about floating cost here
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