b$.$ In the analysis done so far, we have not considered the effects of flotation costs. Assume now that Nealon is raising a total of $$40$ million using the above financing mix. New debt financing will require that the firm pay $50$ basis points $($i$.$e$.,$ one$-$half a percent$)$ in issue costs, the preferred stock issue will require flotation costs of $200$ basis points, and the common stock issue will require flotation costs of $500$ basis points.