Flotation adjusted cost of new common stock
The average range of flotation costs for issuing common stocks falls Hence, raising capital via debt or issuance of new stocks would affect the cost of The current price of the share will need to be adjusted to accommodate the flotation cost. The shares are more senior than common stock but are more junior relative to The flotation costs for the issuance of common shares typically ranges from 2% to 8%. For example, let's assume that a company issues new common shares. As a result, the cost of equity formula adjusted for the flotation costs will look:. The Cost of New Common Stock and the WACC. 1 The WACC Assuming that Allied has a flotation cost of 10 percent, its cost of new com- mon equity would make adjustments to its capital structure and/or its dividend payments, and these