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help quick, is my first one right and whats the second If a fimm plans to issue new stock, fotation corts (thivestment barkers' fees) should

help quick, is my first one right and whats the second image text in transcribed
If a fimm plans to issue new stock, fotation corts (thivestment barkers' fees) should not be ignored. There are two approaches to use to account for fiotation costs. The first approach is to add the num of flotation costs for the debk, prefened, and commen stock and add them to the initial investment cost. Because the investment cost is increased, the project's expected rete of retum is reduced so 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 Toloms: Cost of equity from new stock =r1=h1+1D1+B The oiterence between the fotabion-adjusted cost of equity and the cost of equity calculated without the flotation adjustment regresents the fiotation cost adjustment. Quantitative Problem: Barton industries expects next year's annual dividend, Di, to be $1.50 and it expects dividends to grow at a constant rate 9 w 4%. The firm's current cormmon stock price, Po, is \$25.00. If it needs to issue new common stock, the firm will encounter a 5.4 W flotation cost, F. What is the flotation cost adjustment that must be added to as cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal piaces. What is the colt of new common equity considering the extimate made from the three estimation methedologies? Do not round intermediate caloulabons. Round your answer to two decimal placet

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