2. Stagnant Inc. is a swimming pool supply company that is currently unlevered with a P/E ratio of 12. The company has no growth prospects. The tax rate is 35 per cent. a. What is Stangants cost of capital? b. Stagnant is considering adopting a new capital structure with 50 per cent debt. It has consulted with a bank which is willing to lend at a 5 per cent rate. What will be the new return on equity, WACC and P/E ratio