Byron Corporation's target capital structure consists of 40% debt and 60% common equity. Assume that the firm has no retained earnings. The company's last dividend (D0) was $2.00, which is expected to grow at a constant rate of 5%; and the current stock price is $21.88. Byron can raise all the debt financing it needs at 14%. If Byron issues new common stock, a 20% flotation cost will be incurred. The firm's tax rate is 40%.

What is the component cost of the equity raised by selling new common stock?

a. 17.0%

b. 16.4%

c. 15.0%

d. 14.6%

e. 12.0%

What is the firm's WACC?

a. 10.8%

b. 13.6%

c. 14.2%

d. 16.4%

e. 18.0%

Please show calculations.