Flotation Costs. A project costs $10 million and has NPV of $+2.5 million. The NPV is computed

Question:

Flotation Costs. A project costs $10 million and has NPV of $+2.5 million. The NPV is computed by discounting at a WACC of 15 percent. Unfortunately, the $10 million investment will have to be raised by a stock issue. The issue would incur flotation costs of $1.2 million. Should the project be undertaken?

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