JBL Industries is an all-equity financed corporation with a current 12% cost of capital and $200m market capitalization (risk-free rate is 5%, and the company's stock beta is 1). JBL business has become stable, and the firm has been generating a stable stream of cash in recent years. Management contemplates to replace 25% of the equity with debt through issuing risk-free debt and repurchasing stock. What would be the required return on equity after this change? Assume no taxes and efficient capital markets.