5 CENGAGE MINDTAP Ch 10: Assignment - The Cost of Capital True or Falue: The following statement accurately describes how firms make decisions related to issuing new common stock ta firmes addicional capital from equity sources once its retained earnings breakpoint is reached, it will have to raise the capital by Signe common stock Thie: Firms will rise all the equity they can from retained earnings before issuing new common stock, because capital from retained camins is cheaper than capitalased from issuing new common stock Poise Piems rase capital from retained earnings only when they cannot issue new common stock due to market conditions outside of their control Alpha Moose Transporters is considering investing in a one-year project that requires an initial investment of $475,000. To do so, it will have to issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow of $595,000. The rate of return trat Alpha Moore expects to earn on its project (net of its rotation costs) ls_ (rounded to two decimal places) 2 Sunny Day Manufacturing Company has a current stock price of $33-35 per share, and is expected to pay a pershare dividend of $2.03 at the end of the year. The company's earnings and dividends growth rate are expected to grow at the constant rate of 8.70% into the foreseeable future. 14 Sunny Day expects to incur Rotation costs of 5.00% of the value of its newlyfraised equity funds, then the notation-adjusted (net) cost of its new common stock rounded to two decimal places) should be Alpha Moose Transporters Co.'s addition to earnings for this year is expected to be $420,000. Its target capital structure consists of 35% debt, 5% preferred, and 50% equity. Determine Alpha Mode Transporters's retained earnings breakpoint: $735,000 $630,000 $1,200,000 $700,000