A firm has determined that it can issue preferred stock at $100 par value per share. The stock will pay a $12 annual dividend. The cost of issuing and selling the stock is $5 per share. Hence, the cost of preferred stock financing for the firm is ___.

a) 5.26

b) 12.63

c) 0.13

d) 12

A firm has common stock with a market price of $125 per share. The firm recently paid a dividend of $4 per share. The growth rate of the firm's dividends has been steady at 5% per year. Hence, the cost of the firm's retained earnings is ___.

a) 8.20

b) 8.36

c) 0.08

d) 5.03