If a fimm plans to issue new stock, Hotation costs (iinvestment bankers' fees) should not be ignored. There are two approaches to use to acconnt for fotation coats. The first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial irvestment cost. Because the investment cost is increased, the project's expected rate of return is reduced so it may not meet the flim's hurdle rate for acceptance of the project. The second approach inwolves adjusting the cost of comman equify as follows: Cost of equity from new stock =re=R1(1n)D1+g The difference between the fotation-asjusted cost of equity and the cost of equity calculated without the fiatation adjustment represents the flotation cost adjustment. Quantitative Problem: Barton Industries expects next year's annual dividend, D3, to be $2.00 and it expects dividends to grow at a carstant rate 9 - 4.1. Th. The firm's curtent common stock price, Po, is $23.60, If it necds fo issuin new common stock, the firm will encounter a 5.5% flotation cost, F. Assume that the cost of equity cokculated witheut the flotation adjustment is 12% and the cost of old common equity is 11.3%. What is the flotation cost adjustment that mest be added to Hs cost of retained carnings? Do not round intermediate calculations. Round your answer to two decimal places. What is the cost of new comman equity considering the estimate made from the three estirnation methodologles? Do not found intermediate calculations. Aount your aniswer to two decimal places