Hartford Mining has 90

90 million shares that are currently trading for $ 2

$2 per share and $ 110

$110 million worth of debt. The debt is risk free and has an interest rate of 8 %

8%, and the expected return of Hartford stock is 12 %

12%. Suppose a mining strike causes the price of Hartford stock to fall 28 %

28% to $ 1.44

$1.44 per share. The value of therisk-free debt is unchanged. Assuming there are no taxes and the risk(unlevered beta) ofHartford's assets isunchanged, what happens toHartford's equity cost ofcapital?