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, $D_1,$ to be $$1\mathrm{.}80$ and it expects dividends to grow at a constant rate $g_L=4\mathrm{.}6\%.$ The firm's current

common stock price, $P_0,$ is $$22\mathrm{.}50.$ If it needs to issue new common stock, the firm will encounter a $4\mathrm{.}3\%$ flotation cost, $F.$ Assume that the cost of equity calculated without the

flotation adjustment is $12\mathrm{.}6\%$ and the cost of old common equity is $12\mathrm{.}0\%.$ 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 places.

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What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to

two decimal places.

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