Newtron Inc. is going to finance half of the new investment project with retained earnings and the other half, with a new stock issue. In the current year dividends distributed per face value is 30 %. The company has adopted a policy of distributing 40 % of its profits and using the rest in reinvestment. The average profitability of assets is 22 % and flotation cost pers hare is equal to 0,50 ₺ and the current market price of one share is 15 %. Using the Dividend Discount Model,

a) Compute the cost of retained earnings

b) Compute the cost of newly issued stocks