HC wants to buy SX$.$ Key information for each firm is provided in the table below. Management at HC believes that SX could stand to have more leverage, which would generate additional tax shields. So$,$ the management at HC plans to increase SX$\text{'}$s debt so that its leverage ratio $($debt to market equity$)$ becomes $0\mathrm{.}35.$ Assume that the risk$-$free rate is $2\mathrm{.}8\%,$ and that the market risk premium in $5\mathrm{.}5\%.$ Assume that the cost of debt is unaffected by the increased leverage. What cost of capital do you use to value SX$?$ You can assume the beta of the debt$=0.$ Round the decimal to the $4$th place.