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Jarett & Sons's common stock currently trades at $26.00 a share. It is expected to pay an annual dividend of $2.25 a share at the end of the year (D = $2.25), and the constant growth rate is 3% a year. a. 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. b. If the company issued new stock, it would incur a 14% flotation cost. What would be the cost of equity from new stock? Do not round Intermediate calculations. Round your answer to two decimal places. Olsen Outfitters Inc. believes that its optimal capital structure consists of 40% common equity and 60% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $1 million of retained earnings with a cost of r, = 10%. New common stock in an amount up to $6 million would have a cost of re- 12.5%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of ra = 11% and an additional $4 million of debt atte- 13%. The CFO estimates that a proposed expansion would require an investment of $3.7 milion. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places