A. Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $101.50, but flotation costs will be 5% of the market price, so the net price will be $96.43 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places.

B. The Holmes Company's currently outstanding bonds have a 9% coupon and a 14% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40%, what is Holmes's after-tax cost of debt? Round your answer to two decimal places.