Torch Industries can issue perpetual preferred stock at a price of $54.50 a share. The stock would pay a constant annual dividend of $5.00 a share. What is the company's cost of preferred stock, r_p? Round your answer to two decimal places.

Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 12%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 10.20%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.

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