Barton Industries expects next year's annual dividend,
D1, to be $2.50 and it expects dividends to grow at a
constant rate g = 4.2%. The firm's current common stock price,
P0, is $22.90. If it needs to issue new common stock,
the firm will encounter a 5.9% flotation cost, F. 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? Round your answer to 2 decimal places. Do not round
What is the cost of new common equity considering the estimate made from the three estimation methodologies? Round your answer to 2 decimal places. Do not round intermediate calculations.
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