8. The cost of Capital: Cost of New Common Stock If a firm plans to issue new stock, notation costs (Investment bankersfees) should not be ignored. There are two approaches to use to account for flotation costs. The first approach id 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 return is reduced to it may not meet the firm's hurdle rate for acceptance of the project. The second approach involves adjusting the cost of common equity as follows: Cost of equity from new stock 1+8 The difference between the flotation-adjusted cost of equity and the cost of equity calculated without the Plokaton adjustment represents the flotation cost adjustmant. Quantitative Problem: Barton Industries expects next year's annual dividend, D. to be 11.60 and it expects dividends to grow at a constant catega. The firme current common stock price, Paris 120.00. If it needs to iste naw.common stock, the firm will encounter a 4.79 Motation cost what is the fiotation cost adjustment that must be added to its cost of retained earnings? Do not found intermediate calculation. Round your answer to two decimal place, What is the cout of new common equity considering the witmatu made from the these estimation methodologies? Do not routes intermediate calculations. Nouna your mawar to two. decimal places