RiverRocks realizes that it will have to raise the financing for the acquisition of Raft Adventures by issuing new debt and equity. The acquisition project has a net present value of $36.36 million. The firm estimates that the direct issuing costs will come to $7.00 million. How should it account for these costs in evaluating the project? Should RiverRocks proceed with the project?

A. The direct issuing costs should be included as a direct cost and should be amortized over the life of the project.

B. The direct issuing costs should not be included as a direct cost of the acquisition because it is a sunk cost.

C.The direct issuing costs should be included as a direct cost of the acquisition, i.e.,

NPV equals $ 36.36 million minus $ 7.00 million equals $ 29.36 million

D.The direct issuing costs should be included as a direct cost of the acquisition, i.e.,

NPV equals $ 36.36 million plus $ 7.00 million equals $ 43.36 million

Should RiverRocks go ahead with the project?Yes or No