Company U and company L are identical in every respect except company U is unlevered and company L has $1,000,000 perpetual debt with an interest rate of 6%. Both companies are expecting to have an EBIT of $300,000 in perpetuity and all earnings will be immediately distributed to common shareholders. Company U has a cost of equity of 10%. Assume that all Modigliani and Miller assumptions are satisfied. Calculate the cost of equity for the levered firm according to MM proposition I without taxes