Jarett & Sons' common stock currently trades at $31.00 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 6% a year.

1. 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.

   %

2. If the company issued new stock, it would incur a 12% flotation cost. What would be the cost of equity from new stock? Do not round intermediate calculations. Round your answer to two decimal places.

   %