The weights used in the computation of a project's flotation costs should be based on the

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The weights used in the computation of a project's flotation costs should be based on the company's target debt-to-equity ratio. This is because the target debt-to-equity ratio represents the company's desired capital structure, and thus reflects the optimal mix of debt and equity financing that the company wants to use. Using this ratio to determine the weights of debt and equity in the flotation cost calculation will provide a more accurate representation of the true cost of financing the project.

The Weights Used in the Computation of a Project's Flotation