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 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 finvestment cost is increased, 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 involves adjusting the cost of common equity as folions: Cost of equity from new stock =rf=D1(1n)D+g The difference between the fotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the fiotation cost adjustment. Quantitative Probiems Barton Industries expects next year's annual dividend, D1, to be $2.00 and it expects dividends to grow at a constant rate g=4.2%. The firm's current common stock price, P6 is $20.00. If it needs to issue new common stock, the firm wal encounter a 5.5% flotation cost, F. What is the flotation cost adjustment that must be added to its cont of retained earnings? Do not round intermediste calculations. Round your answer to two decimal places. What is the cost of new common equity considering the evimato mode from the three estimation methodologies? Do not round intermediate calculations. Round your antwer to two decimal places