1. An unlevered company that has a current value of $14,000,000 is considering borrowing $4,000,000 and using the borrowed funds to repurchase shares. The company can borrow at 5.25%. EBIT is expected to be $2,100,000 every year forever. Assume all available earnings are immediately distributed to common shareholders and all the M&M assumptions are satisfied. What is the company's unlevered cost of equity according to M&M Proposition I without taxes?