Question: please help me with flotation cost adjustment Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the bond-yield-plus-risk-premium approach, and

 please help me with flotation cost adjustment Barton Industries estimates its
please help me with flotation cost adjustment

Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the bond-yield-plus-risk-premium approach, and the DCF model. Barton just paid an annual dividend, Do, of $2.30 and it expects dividends to grow at a constant rate g = 4.2%. The firm's current common stock price, Po, is $27.00. The current risk-free rate, Tre = 4%; the market risk premium, RPM, = 5.0%, and the firm's stock has a current beta, b, = 1.2. Assume that the firm's cost of debt, ra, is 8.24%. The firm uses a 3.3% risk premium when arriving at a ballpark estimate of its cost of equity using the bond-yield-plus-risk-premium approach. What is the firm's cost of equity using each of these three approaches? Round your answer to 2 decimal places. Do not round intermediate calculations. 1. The CAPM approach (3 points) II. The bond-yield-plus-risk-premium approach (2 points) III. The DCF model (4 points) I IV. Barton Industries expects that if it needs to issue new common stock, the firm will encounter a 6,4% flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? (3 points)

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