1. Jackson Holding has just paid an annual dividend of $0.45 per share. Analysts expect the firm's dividends to grow by 3% forever. Its stock price is $35.6.

What is the cost of equity from retained earnings?

2. Belkin is expected to pay an annual dividend of $12.38 one year from now. Dividends are expected to grow by 2.5% every year and the current stock price is $180.7. The company is in the process of issuing new common stock, with flotation costs of 9% of the issue price.

a. What is the cost of new common stock?

b. What is the flotation cost adjustment?