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The cost of issuing new common stock is calculated the same way as the cost of raising equity capital from reta earnings. O False: Flotation costs need to be taken into account when calculating the cost of issuing new common sto but they do not need to be taken into account when raising capital from retained earnings. O True: The cost of retained earnings and the cost of new common stock are calculated in the same manne except that the cost of retained earnings is based on the firm's existing common equity, while the cost of common stock is based on the value of the firm's share price net of its flotation cost. White Lion Homebuilders is considering investing in a one-year project that requires an initial investment f $450,000. To do so, it will have issue new common stock and will incur a flotation cost of 2.00%. At the end of th year, the project is expected to produce a cash inflow of $550,000. The rate of return that White Lion expects to on its project (net of its flotation costs) is (rounded to two decimal places). Alpha Moose Transporters has a current stock price of $33.35 per share, and is expected to pay a per-share divide of $2.45 at the end of next year. The company's earnings' and dividends' growth rate are expected to grow at the constant rate of 9.40% into the foreseeable future. If Alpha Moose expects to incur flotation costs of 6.50% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimal places) should be White Lion Homebuilders Co.'s addition to earnings for this year is expected to be $420,000. Its target capital structure consists of 40% debt, 5% preferred, and 55% equity. Determine white Lion Homebuilders's retained earnings breakpoint: O $954,545 $1,050,000 O $801,818 $763,636