The cost of new common stock True or False: The following statement accurately describes how firms make decisions related to issulng new common stock. If a firm needs additional capital from equity sources once its retained earnings breakpoint is resched, it will have to raise the capital by issuing new common stock. True: Firms will raise all the equity they can from retained esmings before issuing new common stock, because capital from retained earnings is cheaper than capital raised from issuing new commen stock. False: Firms raise capital from retained earnings only when they cannot issue new common stock due to market conditions outside of their control. 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 folation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow af 5550,000 . The rate of return that White bion expects to earn on its project (net of its fotation costs) is (rounded to two decimal places). Apha Moose Transporters has a current stock price of 533.35 per share, and is expected to pay a per-share dividend of 52.03 at the end of the year. The compsny'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 6.50\% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its nev common stock (rounded to two decimal places) should be White Lion Homebuilders Co,s addition to earnings for this year is expected to be 5745,000 . 1ts target capital structure consists of 35% debt, 5% preferred, and 60% ncuity. Determine White Lon Homebullders's retained earnings breakpoint: False: Firms raise capital from retained earnings only when they cannot issue new common stock due to market conditions outside of their control. White Lion Homebullders 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 inflow of $550,000. The rate of return that White Uon expects to earn on its project (net of its flotation costs) is (rounded to two decimal places). Alpha Moose Transporters has a current stock price of $33.35 per share, and is expected to pay a per-share dividend of $2.03 at the end of the year. The company's eamings' 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 6.50% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimal places) should be White Lon Homebuilders Co.'s addition to earnings for this year is expected to be $745,000. Its target capital structure consists of 35% debt, 5\% preferred, and 60% equity. Determine White Lion Homebuilders's retained earnings breakpoint: $1,241,667$1,179,584$2,128,571$1,117,500