Blanko Associates Co. currently is financed with 10% debt and 90% equity. However, its CFO has proposed that the firm issue new long-term debt and repurchase some of the firms common stock. Its advisers believe that the long-term debt would require a before-tax yield of 10%, while the firms basic earning power is 14%. The firms operating income and total assets will not be affected. The CFO has told the rest of the management team that he believes this move will increase the firms stock price. If Blanko Associates Co. proceeds with the recapitalization, which of the following items are also likely to increase? Check all that apply.

Net income

Return on assets (ROA)

Cost of debt (rdrd)

Basic earning power (BEP)

Cost of equity (rsrs)