2. Next, a decision is made to obtain new common stock and you will need to adjust the costs in the capital structure (not the weights). Recompute the weighted average cost using new common stock (with flotation costs) in the capital structure. Assume the weights remain the same; only common equity is now supplied by new common stock, rather than by retained earnings (debt and preferred stock costs remain the same).

North of the Border Sensors Inc. Statement of Financial Position: Balance Sheet December 31, 2016 Assets rent assets: Cash Marketable securitles Accounts rece vable $ 300,000 150,000 Less: Allowance for bad debts 5,600,000 otal current assets $ 8,350,000 Fixed assets: Plant and equipment, original cost $ 31,300,000 Less: Accumulated depreclation Net plant and equipment 17,900,000 otal assets Liabilities and Owners' Equity t liabilities: Accounts payable Accrued expenses $5,750,000 1,950,000 $ 7,700,000 otal current lablities Long-term financing $ 6,180,000 Bonds payable Preferred stock Common stock Retained earnings $ 6,100,000 { Common equity 5,050,000 Total common equity 150,000 Total long-term financing 18,550,000 Total liabilites and equity