What are flotation costs? Funds actually received by the firm from the sale of a security The total cost of issuing and selling a security The financing cost associated with new funds raised through long-term borrowing O All of the above QUESTION 17 Why is issuing debt preferable to issuing equity? Debt does not have to be paid back Debt is partial ownership of the company The more debt you acquire, the lower your liability Debt allows for a tax write-off QUESTION 18 What are the two methods for determining the cost of capital for common stocks? O CAPM and Gordon Growth Model CAPM straight-line decline taxation model MACRS and the Garden Granth Model