Cost of Equity with and without Flotation

Javits & Sons' common stock currently trades at $37.00 a share. It is expected to pay an annual dividend of $1.25 a share at the end of the year (D₁= $1.25), and the constant growth rate is 3% a year.

2. What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places.%
3. If the company were to issue new stock, it would incur a 12% flotation cost. What would the cost of equity from new stock be? Round your answer to two decimal places.%