Gamma Limited is currently financed by $100\%$ equity. It is considering a proposal to

introduce debt into its capital structure, whereby it would have a debt$-$equity ratio of

$0\mathrm{.}5.$ Gamma$$s beta, if all equity financed, is $0\mathrm{.}70.$ The risk$-$free rate is $4\%,$ the Market

Risk Premium is $6\%,$ and the tax rate is $30\%.$

a$)$ What is the current cost of equity of Gamma Limited?

b$)$ Use the capital asset pricing model to estimate the cost of equity under the

proposed capital structure.