a) What are costs associated of going public (both direct and indirect)? Why are costs higher for IPO than for SEO? Why are the cost of raising equity capital higher than that of debt? Who bears these costs of raising capital? Explain

c) Which market imperfections lead a cost of outside capital? How do the availability and cost of outside capital affect payout (dividend) policy?

d ) Explain the logic of the residual payout (dividend) model and the steps a firm would take to implement it.

e) Many companies that go public with an IPO dont actually need additional cash (AFN = 0). Why might such a firm decide to go public? Provide 4 key reasons according to survey data.