2 Lime Automotive Corp. starts life with all-equity financing and a cost of equity of 14.5%. Suppose it refinances to the following market value capital structure: Cost of debt (rd) 8.0% Debt (%) = Equity (%) 60% 40% a Use MM's proposition 2 to calculate Lime's new cost of equity. re b Calculate Lime's new after-tax weighted average cost of capital (WACC). Lime pays taxes at a marginal rate of Tc = 36%. WACC (after-tax) =