Problem $11-16($Algo$)$ Costs of retained earnings and new common stock $[$LO$11-3]$

Murray Motor Company wants you to calculate its cost of common stock. During the next $12$ months, the

company expects to pay dividends $(D_1)$ of $$4\mathrm{.}00$ per share, and the current price of its common stock is

$$82$ per share. The expected growth rate is $10$ percent.

a$.$ Compute the cost of retained earnings $(Ke).$

Note: Do not round intermediate calculations. Input your answer as a percent rounded to $2$ decimal

places.

Cost of retained earnings

b$.$ If a $$4$ flotation cost is involved, compute the cost of new common stock $(K_n).$

Note: Do not round intermediate calculations. Input your answer as a percent rounded to $2$ decimal

places.

Cost of new common stock