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 $1.70 per share, and the current price of its common stock is $34 per share. The expected growth rate is 8 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 $2 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

%