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Explain the Following as Factors Affecting Choice of Capital Structure: Floatation Costs - Business Studies

Explain the following as factors affecting the choice of capital structure:

Floatation costs

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Solution

Flotation cost: Based on costs involved to raise funds from various sources will affect the selection of the capital structure by a company.
Higher flotation cost involved in raising funds from a particular source Lower proportion of that source in the capital structure.

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