Murray Motor Company wants you to calculate its cost of common stock. During the next $12$ months, the company expects to pay dividends $(D_1)$ of $$2\mathrm{.}20$ per share, and the current price of its common stock is $$40$ per share. The expected growth rate is $7$ percent.

a$.$ Compute the cost of retained earnings $(Ke).$

Note: Do not round intermediate calculations. Input your answer as a percent rounded to $2$ decimal places.

Cost of retained earnings

$\%$

b$.$ If a $$2$ flotation cost is involved, compute the cost of new common stock $(K_n)$

Note: Do not round intermediate calculations. Input your answer as a percent rounded to $2$ decimal places.

Cost of new common stock

$\%$