If a firm plans to issue new stock, flotation costs (imvestment bankers' fees) should not be ignored. There are two approaches to use to account for flotation costs. The first approa 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 incressed, the project's expected rate of return is reduced so it may not meet, the firm's hurdle rate for acceptance of the project. The second approach invoives adjusting the cost of cammon equity as follows: Cost of equity from new stock =rq=Pi(1F1)D8+g The difference between the flotation-adjusted cost of equity and the cost of equity calculated without the fotation adjustment represents the flotabion cost adjustment. Quantitative Problem: Barton Industries expects next vesr's annual dividend, D1, to be $2,40 and it expects dividends to grow at a constant rate o =5%, The firm's current common steck price, P0, is $25.00. If it needs to issue new common stock, the firm will encounter a 5.14 flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculotions. Round your answer to two decimal places. What is thie cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations, Round your answer to twa decomel places. If a firm plans to issue new stock, flotation costs (imvestment bankers' fees) should not be ignored. There are two approaches to use to account for flotation costs. The first approa 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 incressed, the project's expected rate of return is reduced so it may not meet, the firm's hurdle rate for acceptance of the project. The second approach invoives adjusting the cost of cammon equity as follows: Cost of equity from new stock =rq=Pi(1F1)D8+g The difference between the flotation-adjusted cost of equity and the cost of equity calculated without the fotation adjustment represents the flotabion cost adjustment. Quantitative Problem: Barton Industries expects next vesr's annual dividend, D1, to be $2,40 and it expects dividends to grow at a constant rate o =5%, The firm's current common steck price, P0, is $25.00. If it needs to issue new common stock, the firm will encounter a 5.14 flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculotions. Round your answer to two decimal places. What is thie cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations, Round your answer to twa decomel places