Murray Motor Company wantsyou to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D₁) of $4.00 per share, and the current price of its common stock is $82 per share. The expected growth rate is 10 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.)

Cost of retained earning

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.)