Use the following information for Abbot Diaries to answer he following questions.

- Abbot can borrow up to $5 million from the bank at an interest rate of 6% per year. Amounts over $5 million will require an interest rate of 9% per year.

- Abbot has no preferred stock

- Abbots common stock is currently selling for $28 per share. Abbot expects its next dividend(D1) will be $3 per share, and the dividend is growing at a cosntant rate of 4%. Beta for abbots stock is 1.3, which is riskier than the average stock.

- Flotation costs to sell new common stock are equal to $3.50 per share

- Abbot expects retained earnings next year to be $11 million

- Abbots tax rate is 40%

- Abbots optimal capital structure is 30% debt and 70% common equity.

1.) The cost of common equity if using retained earnings is?

a.) 14.741%

b.) 21.667%

c.) 10.857%

d.) 4.307%

2.) The cost of common equity if selling new shares of common stock is:

a.) 23.605%

b.) 16.245%

c.) 12.285%

d.) 4.122%

How do I work these out by hand using a normal calculator (TI-89 or TI-30XIIS)?