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firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. There are two approaches to use to account for flotation costs, The firs proach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investrment cost, Because the investment cost is creased, the project's expected rate of return is reduced so it may not meet the firm's hurtle rate for acceptance of the project, The second approach involves adjusting. e. cost of cornmon equity as follows: Cost of equity from new stock =re=P0(2F)D1+g The difference between the fintation-adyusted cost of equaty and the cost of equity calculated without the flotation adjuntment represents the llotation cost adjustiment. Quantitative Problem: Berton Industries expects next year's annual dividend, Di, to be $1.70. and it expects dividends to orow at a constant rate a =5%, The fim's current common stock price, Po, is 320.00. If it needs to issuet new cormen stock, the firm wall encounter a 4.4% flotation cost, F. What is the flotation cost idjustment that? must be added to its cout of retained earnings? Do not round intermediste caldethtions. Hound vour answer to two decumal places. What is the cou of new common equity consdering the estimate mode from then three ectamation methodologies? Do not round intermediate calculations. found your answer to two decamal places