Broadview Supply, a national hardware chain, is considering purchasing a smaller chain, Strauss & Glazer Parts (SGP). Broadview's analysts project that the merger will result in the following incremental free cash flows, tax shields, and horizon values (in million dollars):

Year	1	2	3	4
Free cash flow	$3	$4	$4	$6
Unlevered horizon value				45
Tax shield	1	1	1	2
Horizon value of tax shield				15

Assume that all cash flows occur at the end of the year. SGP is currently financed with $20 million of debt at an interest rate of 8%. It has 3 million shares outstanding, with a market price of $10 per share, and has a beta of 2.0. SGP does not have non-operating assets. The risk-free rate is 3% and the market risk premium is 4%.

1. What is the unleavened cost of equity of SGP? (5)

2. What is the SGPs equity value post-merger? (5)