If a firm plans to issue new stock, flotation costs (imvestment barkers' 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 increa expected rate of refurn is reduced so it may not meet the firm's burdle rate fon acceptance of the project. The second approach involves adjusting the cost of common equity as follows: Cost of equity from new stock =re=Fi()D1+i The difference between the fiotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the fiotation cost adjustment. Quantitative Problemt Barton Industries expects next vear's anmal eividend, O4 to be $2.20 and it expects divisenes to grow at a constant rate g=45. The firm's current common stock price. Po, it $25.00, If it needs to issue new common stock, the firm wil encounter a 4.9% flotation cost, f. What is the fiatation cost adjustinent that must be added to its cost of retained earnings? Do noe round intermediate calculations. Hound your hoswer to two decimal places. What is the cost of new common equity considening the estimye made from the three estimation methodologies? Do not round insermediate caiculations. Aound your ansner to two decomal dlaces