1. Cowan Industries is an all equity funded chemical company, with 200 million shares trading at $ 10 a share; the cost of equity is 9%. The firm is considering borrowing $ 600 million at an interest rate of 6% and buying back shares. If the marginal tax rate is 40%, estimate the new cost of capital for the firm. (The riskfree rate is 5% and the equity risk premium is 4%)