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An all-equity company decides to recapitalize. The company has an unleveled beta of 1.1, the market risk premium is 6% and the risk-free rate is

An all-equity company decides to recapitalize. The company has an unleveled beta of 1.1, the market risk premium is 6% and the risk-free rate is 5%. The company's tax rate is 25%.
If the company starts to borrow with a 25% debt ratio, what will be the levered beta using Hamada’s equation?
What is the cost of equity before and after the recapitalisation respectively?
Why is the cost of equity higher after the recapitalisation?

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