Meyer & Co. expects its EBIT to be $127,000 every year forever. The firm can borrow at 8 percent. The companycurrently has no debt, and its cost of equity is 14 percent and the tax rate is 21 percent. The company borrows $177,000 and uses the proceeds to repurchase shares.

a.What is the cost of equity after recapitalization?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b.What is the WACC?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)