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An unlevered firm with a weighted average cost of capital of 20%. The firm will issue debt and use the proceeds to repurchase stock. Assume

An unlevered firm with a weighted average cost of capital of 20%. The firm will issue debt and use the proceeds to repurchase stock. Assume the firm debt-to equity ratio is 1.4 after the issue. If the firm can borrow at 6% and the corporate tax rate is 25%, what will the cost of equity be after the debt issue?

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