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. True: Taking flotation 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 calculated. False: Flotation costs are additional costs associated with raising new common stock. Manning Co. is considering a one-year project that requires an initial investment of $450,000; however, in raising this capital, Manning will incur an additional flotation cost of 2.0%. At the end of the year, the project is expected to produce a cash inflow of $550,000. Determine the rate of return that Manning expects to earn on the project after flotation costs are taken into account. 19.8% 15.8% 13.9% 17.8% Manning Co. has a current stock price of $22.35 and is expected to pay a dividend of $2.45 at the end of next year. The company's growth rate is expected to remain constant at 5.2%. If flotation costs represent 5.0% of funds raised, what is the flotation-adjusted cost of new common stock? 16.7% 14.2% 16.2% 13.4% Manning Co.'s addition to earnings for this year is expected to be $420,000. Its target capital structure consists of 50% debt, 5% preferred, and 45% equity. Determine Manning's retained earnings breakpoint: $933, 333 $1, 166, 666 $1, 120,000 $840,000