1)Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 8%, and its marginal tax rate is 25%. The current stock price is P₀ = $30.50. The last dividend was D₀ = $2.00, and it is expected to grow at a 4% constant rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places.

r_s = %

WACC = %

2)The Evanec Company's next expected dividend, D₁, is $3.38; its growth rate is 7%; and its common stock now sells for $40.00. New stock (external equity) can be sold to net $34.00 per share.

1. What is Evanec's cost of retained earnings, r_s? Do not round intermediate calculations. Round your answer to two decimal places.

   r_s = %

2. What is Evanec's percentage flotation cost, F? Round your answer to two decimal places.

   F = %

3. What is Evanec's cost of new common stock, r_e? Do not round intermediate calculations. Round your answer to two decimal places.

   r_e = %