Ad Nauseum Inc. Has a target Capital structure of 40% debt and 60% Equity. Up to $10,000 of new debt can be issued at 12% no, but any new debt will cost the firm 14%. Retained earnings for the current year are $50,000. Next year's expected dividend is $4.00, dividends are growing at 8%, and the current stock price is $20.00. If Ad Nauseum issues new common stock, the flotation costs will be 10% of the issue price. The firm's tax rate is 31%.

a) What is the break point for debt financing?

B) What is the cost of new equity?