Betadine Corp is considering a merger with FlexiBandage Inc. One of the concerns Betadine management has is that they suspect FlexiBandage has a significantly higher cost of equity and the merger could adversely affect their own WACC. Betadine's current cost of equity is 10.15%. Recent market analysis indicates that FlexiBandage is carrying a Beta of 1.4. The US Market Return is 8.6%, and the Federal Reserve's recent TBill auction was yielding a 1.75% return. Flexi Bandage's stock is currently trading at $21.45 and the anticipated merger price is $21.65. Flexi Bandage paid it's last dividend two years ago which was $0.75 per share. Calculate the cost of equity for FlexiBandage. Also, what would be your estimate of the impact to Betadine's WACC if the merger goes through? And if appropriate what could Betadine do to mitigate/accentuate these impacts?