Flood Motors is an all-oquity firm with 200,000 shares outstanding. The company's EBIT is $2 million, and EBIT is expected to remain constant over time. The company pays out all of its earnings each year. The company's tax rate is 40 percent. The company is considering issuing $2 million worth of bonds (at par) and using the proceeds for a stock repurchase. If issued, the bonds would have an estimated yield to maturity of 10 percent. The risk-free rate in the economy if 6.6 percent, and the market risk premium is 6 percent. The company's beta is currently 1.032, but its investment bankers estimate that the company's beta would rise to 1.1 if it proceeds with the recapitalization. (a) What would be the company's stock price following the rocapitalization? (b) What will be the new WACC? 2