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River Rocks realizes that it will have to raise the financing for the acquisition of Raft Adventures by issuing new debt and equity. The acqusition
River Rocks realizes that it will have to raise the financing for the acquisition of Raft Adventures by issuing new debt and equity. The acqusition project has a net present value of $3667 milion. The estimates that the direct issuing costs will come to S7 14 million. How should it account for these costs in evaluating the project? Should River Rocks proceed with the project? How should it account for these costs in evaluating the project? (Select the best choice below) A. The direct issuing costs should be included as a direct cost of the acquisition, ie NPV - $3667 million - 57.14 million $29.53 milion OB. The direct issuing costs should not be included as a direct cost of the acquisition because it is a sunk cost. OC. The direct issuing costs should be included as a direct cost and should be amortized over the life of the project. OD. The direct issuing costs should be included as a direct cost of the acquisition in NPV = $3667 million+$714 million = $43 81 million Should River Rocks go ahead with the project? (Select from the drop-down menu) River Rocks go ahead with the project
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