How to Calculate Flotation Costs

How to Calculate Flotation Costs
Flotation costs are associated with the sale of stocks and bonds.

Step 1

Record any fees associated with registering the security that is being sold.

Step 2

Calculate all fees incurred from the services of professionals, such as investment bankers, underwriters and attorneys.

Step 3

Record any state or federal expenses associated with selling the security.

Step 4

Add the totals from Steps 1 through 3 to determine the total flotation cost.

Step 5

Report the flotation costs in terms of percentage if necessary. For instance, if the price of a security is $10,000 and the flotation costs are $500, the flotation costs would account for 5 percent of the price of the security (500 / 10,000 = 0.05; 0.05 x 10 = 5 or 5 percent).