Assume a Levered Firm Plans to Raise New Capital to Finance

Assume a levered firm plans to raise new capital to finance a project.To properly account for the flotation costs,the firm should:

A) subtract the pretax flotation cost from the project's NPV.
B) deduct the amount of the flotation cost from the cash flows for Year 1 of the project.
C) add the percentage of the flotation cost to the WACC when discounting the cash flows.
D) divide the amount of project capital needed by (1 − Weighted average flotation cost) .
E) increase the target weights of both debt and equity to account for the flotation percentage.