Magma Inc.'s management has decided to repurchase some of the company's shares. The company has 1,500,000 shares outstanding that trade at $25.00 per share and book value equity of $37,500,000. It plans to use debt to finance the repurchase at an interest rate of 8.0%. The company's EBIT is $4,000,000. Ignoring income taxes, what is the breakeven EBIT (the EBIT level where pre and post repurchase EPS and ROE are the same)?

WACC Corp. currently has no debt outstanding but can borrow at an interest rate of 8.0%. The company's WACC (unlevered/no debt) is 13.0% and it has a tax rate of 25%. If the company adjusts its capital structure to 40% debt and 60% equity, what will be its cost of equity?