The cost of issuing new common stock is calculated the same way as the cost of raising equity capital from retained earnings. False: Fotation costs need to be taken into account when calculating the cost of issuing new common stock, but they do not need to be taken into account when raising capital from retained earnings. Irue: The cost of retained earnings and the cost of new common stock are colculated in the same manner, except that the cost of retainod oarnings is based on the firm's existing common equity, while the cost of new common stock is based cn the value of the firm's share price nek of its flotation cost. Whute bon Hormebuilders is considering investing in a one-year project that requires an initial investment of $450,000. To do so, it will have to issue new comvmon. stock and will incur a flotation cost of 2.00%. At the end of the yeac, the project is expected to produce a cash inflow of \$595,000, The rate of return that White Lion expects to earn on its project (net of its Hlototion costs) is (rounded to two decimal places). Moha Moose Transporters has a current stock price of 522.35 per share, and is expected to pay a per-share dividend of t1.36 at the end af the yent The company's earnings' and dividends' growth rate are expected to grow at the constant rate of 5:20% into the foreseeable future. If Alpha Moose expects to incur flotation costs of 3.750% of the value of its newiyrraised equity funds, then the fotation-adjusted (net) cost of ies new comimon stock (roanded to two decirmal places) should be White Lion lomebuilders Co. S nddition to earnings for this year is expected to be 5745,000 . Its target capitel structure consists of 40.5 debt, 5% preferred, and 55 \% equity. Determine White Lion Homebuilders's retained earninge breakpoint: $1,354,545 51,422,272 41,219,091 $1,286,818