If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ighored. There are two approaches to use to account for flotation costs, The first sporosch is to add the sum of fotation costs for the debt, preferred, ans common stock and add them to the initial imvestment cost. Because the investment cost is increased, the project's expected rate of retum is reduced so it may not meet the firm's hurdie rate for acceptance of the project. The second approach involves adjusting the cost of common equity as follows: Cost of equity from new stock =ts=hi(tn)D+g The difference between the flotation-adjusted cost of equity and the cost of equity caleulated wahout the fotation adjustment represents the fotation cost adjustment. Quantitative Problem: Barton Industries expects next vear's annual dividend, D1, to be $2.40 and it expects dividends to grow at a constant rate g = 4.5%. The firm's current common stock price, Por is \$20.00. If it needs to lasue new common stock, the firm will encounter a 4.8% flotation cost, F. What is the flotation cost adjustment that imust be added to its cost of retained earnings? Do not round intermediate calculations. Revud your answer to two decimal places. What is the cost of new common equity considering the estimste made from the three estimation methodologios? Do not round intermediate caiculations. Mound your answer to two decimal places