Eagle Trade Inc. (ETI) has determined its optimal capital structure which is composed of the following sources and market values.

Source of Capital	Market Value
Long-term debt	P 8,400,000
Preferred stock	1,550,000
Common stock	12,350,000

Long-term Debt: ETI can sell a 15-year, P1,000 par value, 7% bond for P975. A flotation cost of

P10 would be required in addition to the discount of P25.

Preferred Stock: ETI has determined it can issue preferred stock at P145 per share par value. The stock will pay a P23 annual dividend. The cost of issuing and selling the stock is P11 per share.

Common Stock: ETI's common stock is currently selling for P88 per share. The dividend expected to be paid at the end of next year is P14. Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend was P10.50. It is expected that to sell, a new common stock issue must be underpriced P5 per share in flotation costs. Additionally, the firm's marginal tax rate is 25%.

a. ETI's cost of preferred stock is _______

b. ETI's cost of a new issue of common stock is _______