Honeybest International Inc. (HOB) has a market debt-equity ratio of 0.5. Assume its current debt cost of capital is 6.5%, and its equity cost of capital is 14%. If HOB issues equity and uses the proceeds to repay its debt and reduce its debt-equity ratio to 0.3, it will lower its debt cost of capital to 5.75%. With perfect capital markets, what effect will this transaction have on HOB's equity cost of capital and WACC? (To receive full credit, show the calculations below)