The management of a conservative firm has adopted a policy of never letting debt exceed 30 percent of total financing. The firm will earn $16,000,000 but distribute 40 percent in dividends, so the firm will have $9,600,000 to add to retained earnings. Currently the price of the stock is $60; the company pays a $2 per share dividend, which is expected to grow annually at 8 percent. If the company sells new shares, the net to the company will be $58.

a. Given this information, what is the cost of retained earnings? Round your answer to one decimal place.

b. % cost of new common stock? Round your answer to one decimal place. %

c. The rate of interest on the firms long-term debt is 12 percent and the firm is in the 32 percent income tax bracket. If the firm issues more than $2,300,000, the interest rate will rise to 13 percent. Given this information, what is the cost of debt? Round your answer to one decimal place.

d. % cost of debt in excess of $2,300,000? Round your answer to one decimal place. %