The difference between the external and internal cost of raising equity capital is due to flotation costs.

Question

Quizplus · Accepted Answer

Flotation costs are the fees and expenses incurred by a company when it issues new securities, and they represent the difference between the external (actual funds received from the new equity) and internal (theoretical or calculated cost without considering these expenses) cost of raising equity capital.

The Difference Between the External and Internal Cost of Raising