rue or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. Thue: Taking fotation costs into account will reduce the cost of new common stock, because you will multiply the cost of new common stock by 1 minus the flotation cost-similar to how the after-tax cost of debt is caiculated. False: Flotation costs are additional costs associated with raising new common stock. White Uon Homebulders is considering investing in a one-year project that requires an initial investment of $475,000. To do so, it will have to issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash infiow of $595,000. The rate of return that White Lon expects to earn on its project (net of its flotation costs) is (rounded to two decimal piaces). Apha Moose Transporters has a current stock price of $22.35 per share, and is expected to pay a per-share dividend of $2.45 at the end of the year: The company's earnings' and dividends' growth rate are expected to grow at the constant rate of 9.40% into the foreseeable future. If Alpha Moose expects to incur flotation costs of 3.750% of the value of its newly-roised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimat places) should be White Lon Homebuiders Co.s addition to earnings for this year is expected to be $857,000. Its target capital structure consists of 35\% debt, 5% preferred, and 60% equity. Determine White Lon Homebuilders's retained earnings breakpoint: $1,428,333 $1,571,166 $1,714,000 $1,785,416