Gaucho Services starts life with all$-$equity financing and a cost of equity of $14\%.$ Suppose it refinances to the following market$-$value

capital structure:

Equity $(E),55\%$

a$.$ Use MM$\text{'}$s proposition $2$ to calculate the new cost of equity. Gaucho pays taxes at a marginal rate of $T_c=40\%.$

b$.$ Calculate Gaucho's after$-$tax weighted$-$average cost of capital.

Note: Do not round intermediate calculations. Enter your answers as a percent rounded to $2$ decimal places.