If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. There are two approaches to use to account for flotation costs. The first apgroac 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 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 =ri=P0(xF)D1+g The difference between the fotation-adjusted cost of equity and the cost of equity calculated without the fotation adjustment represents the flotation cost adjustinent. Quantitative Problem: Barton Industries expects next year's annual dividend, D, to be 31.80 and it expects dividends to grow at a constant rate g = 4.3 . The firm's cument common stock price, Po, is $20.00. If F needs to issue new common stock, the firm will encounter a 5.4W fotation cost, 5 . What is the fotation cost adjustment that must be added to its cost of retained earnings? Do not round intermeciate cakculations. Round vour answer to two decimal places. What is the cost of new commos equiky considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answe to two decimal plsces