Bania Corporation's target capital structure consists of $40\%$ debt and $60\%$ common equity. Assume that the firm has no retained earnings to fund it$$s capital budget in the coming year. Bania$$s last annual dividend was $$1\mathrm{.}55,$ which is expected to grow at a constant rate of $5\%$; and their current stock price is $$21\mathrm{.}88.$ Bania can raise all the debt financing it needs at $10\mathrm{.}50\%.$ If Bania issues new common stock, a $20\%$ flotation cost will be incurred. The firm's tax rate is $25\%.$

What is the component cost of the equity raised by selling new common stock?

What is Bania$$s cost of capital assuming they will have to issue new common stock? $($use WACC $=$ wd rd $(1-$T$)+$ wc re$)$