If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. There are two approsches to use to account for flotation costs. The first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. Because the investment cost is increased, the project's expected rate of return is reduced so it may not meet the fim's hurdie rate for acceptance of the project. The second approsch involves adjusting the cost of comman equity as follows: Cont of equity from new stock =r4=P0(t1D1+g The difference between the fotation-adjusted cost of equity and the cost of equity calculated without the flatation adjustment represents the flotation cost adjustment. Quantitative Problem! Barton industries expects next year's annual dividend, Du, to be $2.00 and it expects dividends to grow at a constant rate q=4%. The firm's current. common stock price, Pe; is $25.00. If it needs to issue new common stock, the firm will encounter a 4.7% fotation cost, F. What is the fotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Hound your answer to two decimal places. What is the cost of new common equity considering the estimate made from the three estimution methodolegies? Do not round intermediate calculations. Round your answer to two decimal places