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If flotation costs are treated correctly in calculating the net present value of a project that will begin in the current period, the flotation costs are most likely:

A included in the initial outlay.

The correct treatment of flotation costs according to the CFA Curriculum is to include their cost in the initial cash outflow of the project. Since flotation costs are included in the initial outlay, they decrease the NPV by an amount that is unaffected by the discount rate, and the discount rare and cost of capital are not adjusted for flotation costs.