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6. Cost of new common stock Aa Aa a True or False: The following statement accurately describes how rms make decisions related to issuing new common stock. Taking otation costs into account will reduce the cost of new common stock. 0 True: Taking otation 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 otation costsimilar to how the after-tax cost of debt is calculated. 0 False: Flotation costs are additional costs associated with raising new common stock. Alpha Moose Transporters is considering investing in a one-year project that requires an initial investment of $475,000. To do so, it will have issue new common stock and will incur a otation 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 Alpha Moose expects to earn on its project (net of its otation costs) is (rounded to two decimal places). Sunny Day Manufacturing Company has a current stock price of $33.35 per share, and is expected to pay a per-share dividend of $1.36 at the end of next year. The company's earnings' and dividends' growth rate are expected to grow at the constant rate of 5.20% into the foreseeable future. If Sunny Day expects to incur otation costs of 5.00% of the value of its newly-raised equity funds, then the otation-adjusted (net) cost of its new common stock (rounded to two decimal places) should be Alpha Moose Transporters 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 Alpha Moose Transporters's retained earnings breakpoint: 0 $1,785,416 0 $1,642,583 0 $1,356,916 0 $1,428,333