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6. A companys operations analyst is evaluating a plant expansion project that is likely to be financed in part by issuing a new common equity. Flotation costs are expected to be 4% of the amount of new equity capital raised. The most appropriate way for the analyst to treat the flotation costs is to:

A. ignore them, because flotation costs for common equity are likely to be nonmaterial.

B. estimate the cost of equity capital based on a share price 4% less than the current price.

C. determine the flotation cost attributable to this project and treat it as part of the projects initial cash outflow.

7. Which of the following statements is correct? I. There can never be a conflict between NPV and IRR decisions if the decision is related to choosing between mutually exclusive projects with normal cash flow patterns, i.e., higher NPV value projects always have higher IRRs. II. A change in the cost of capital would normally change both a projects NPV and its IRR.

A. I is correct B. II is correct. C. Both I and II are correct. D. Neither I nor II are correct.

8. Which of the following statements about ESG in investment analysis is correct?

A. ESG terminology is easily distinguishable among investors.

B. Environmental and social factors have been adopted in investment analysis more slowly than governance factors.

C. ESG factors are strictly intangible in nature

. 9. Shidler Industries finances its projects with 40 percent debt, 10 percent preferred stock, and 50 percent common stock. The company can issue bonds at a yield to maturity of 8.4 percent. The cost of preferred stock is 9 percent. The company's common stock currently sells for $30 a share. The company's dividend is currently $2.00 a share (D0 = $2.00), and is expected to grow at a constant rate of 6 percent per year indefinitely. The companys tax rate is 30 percent. What is the Shidler Industrys weighted average cost of capital (WACC)?

A. 8.83% B. 9.79% C. 10.79%

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