5. 5: The Cost of Capital: Cost of New Common Stock If a firm plans to issue new stock, flotation costs (investment benkers' fees) should not be ignored. There are two approsches to use to account for flotation conts. The first approsch is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. Because the investment cost is increased, the project's expected rate of retum is rediced so it miay not meot the firn's hurdile rate For acceptance of the project. The second approach irvolves adjuating the cost of comiman equity at follows! Coat of equity from new atock =re=pi+i1D1+g The difference between the fotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. Quantitative Problem: Barton Industries expects next year's annual dividend, D1, to be $1,60 and it expects dividends to grow at a constant rate g = 4.34 . The firm ourtunt to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. flound your answer to two decimal places. % 5. 5: The Cost of Capital: Cost of New Common Stock If a firm plans to issue new stock, flotation costs (investment benkers' fees) should not be ignored. There are two approsches to use to account for flotation conts. The first approsch is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. Because the investment cost is increased, the project's expected rate of retum is rediced so it miay not meot the firn's hurdile rate For acceptance of the project. The second approach irvolves adjuating the cost of comiman equity at follows! Coat of equity from new atock =re=pi+i1D1+g The difference between the fotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. Quantitative Problem: Barton Industries expects next year's annual dividend, D1, to be $1,60 and it expects dividends to grow at a constant rate g = 4.34 . The firm ourtunt to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. flound your answer to two decimal places. %