$$Increasing financial leverage increases both the cost of debt $($rdebt$)$

and the cost of equity $($requity$).$So the overall cost of capital cannot stay constant.$$ This problem is designed to show that the speaker is confused. Buggins Incorporated. is financed equally by debt and equity, each with a market value of $$2\mathrm{.}7$ million. The cost of debt is $6\mathrm{.}7\%,$ and the cost of equity is $11\mathrm{.}7\%.$ The company now makes a further $$675,000$ issue of debt and uses the proceeds to repurchase equity. This causes the cost of debt to rise to $7\mathrm{.}2\%$ and the cost of equity to rise to $21\mathrm{.}03\%.$ Assume the firm pays no taxes.

How much debt does the company now have?

How much equity does it now have?

What is the overall cost of capital?

$($Note: Do not round intermediate calculations. Enter your answer as a percent rounded to $1$ decimal place.$)$

What is the percentage increase in earnings per share after the refinancing?

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

What is the new price$-$earnings multiple? $($Hint: Has anything happened to the stock price?$)$

Note: Round your answers to $2$ decimal place.