Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D₁) of $1.40 per share, and the current price of its common stock is $50 per share. The expected growth rate is 4 percent.

a. Compute the cost of retained earnings (K_e). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

b. If a $4 flotation cost is involved, compute the cost of new common stock (K_n). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $1.40 per share, and the current price of its common stock is $50 per share. The expected growth rate is 4 percent. a. Compute the cost of retained earnings (Ke). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Cost of retained earnings b. If a $4 flotation cost is involved, compute the cost of new common stock (Kn). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Cost of new common stock %