1. Brille Corporation is issuing new common stock at a market price of $29. Dividends last year were $1.45 and are expected to grow at an annual rate of 11 percent forever. Flotation costs will be 7 percent of market price. What is Brille's cost of equity?

2. Carraway Seed Company is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 7 years. Investors are willing to pay $930 for the bond. Flotation costs will be 12 percent of market value. The company is in a 20 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?