M&M Proposition 2 with taxes: Forwards Resources Company is currently an all-equity firm with a WACC of 14 percent and a 40 percent marginal tax rate. Forwards wants to move to a capital structure with $250 million of debt outstanding at an interest rate of 9 percent and a market value of equity equal to $750 million outstanding.

Using M&M Proposition 2 with taxes, Equation 16.5, what is the expected return on equity at the new capital structure?