Jarett & Sons' common stock currently trades at $37.00 a share. It is expected to pay an annual dividend of $1.25 a share at the end of the year (D 1 = $1.25), and the constant growth rate is 7% a...

Jarett & Sons' common stock currently trades at $37.00 a share. It is expected to pay an annual dividend of $1.25 a share at the end of the year (D₁ = $1.25), and the constant growth rate is 7% a year.

1. 
   

   What is the company's cost of common equity if all of its equity comes from retained earnings? Do not round intermediate calculations. Round your answer to two decimal places.

   
   

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2. 
   

   If the company issued new stock, it would incur an 11% flotation cost. What would be the cost of equity from new stock? Do not round intermediate calculations. Round your answer to two decimal places.

   
   

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