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How do flotation costs impact the firm's cost of capital? When a firm raises funds by issuing a particular type of security, it incurs flotation

How do flotation costs impact the firm's cost of capital? When a firm raises funds by issuing a particular type of security, it incurs flotation costs that will _____ the firm's cost of capital.(Select the best choice below.)

1. not affect

2. increase

3. eliminate

4. decrease

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