Jarett & Sons' common stock currently trades at $$20\mathrm{.}00$ a share. It is

expected to pay an annual dividend of $$1\mathrm{.}25$ a share at the end of the

year $(D_1=$$$1\mathrm{.}25),$ and the constant growth rate is $6\%$ a year.

a$.$ What is the company's cost of common equity if all of its equity

comes from retained earnings? Do not round intermediate

calculations. Round your answer to two decimal places.

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b$.$ If the company issued new stock, it would incur an $11\%$ flotation

cost$.$ What would be the cost of equity from new stock? Do not

round intermediate calculations. Round your answer to two

decimal places.

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