Attempts: Keep the Highest: 2 S. 5: Determining the cost of Capital: Cost of New Common Stock D Determining the cost of capital: Cost of New Common Stock Tf a firm plans to issue new stock, notation costs investment bankers fees should not be ignored. There are two approaches to use to account for flotation costs. The first approach is to add the sum of flotation costs for the de preferred and common stock and add them to the initial investment cost. Because the investment cost increased the project expected retum coduod old may not meet the firm shurdle rate for acceptance of the project. The second approach involves adjusting the cost of common gultas follows: Cost of equity from new stockr hasta ST The difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment Quantitative Problem: Barton Industries expects next year's annual dividend, s, to be $2.10 and it expects dividends to grow at a constant rate a 5%. The firm's current common stock price. Por is $24.90. If it needs to issue new common stock, the firm will encounter 4.1% flotation cost, Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings do not round intermediate calculations. Round your answer to two decimal placen. What is the cost of new common cauity contidering the estimate made from the three estimation methodologies? Do not round Intermediate calculations. Round your answer to two decimal places