Mitsui Ltd has 1 million issued shares and expects unlevered after-tax cash flows of

$300,000 every year, forever. The company is all-equity financed, and its cost of

capital is 12% p.a. The company's tax rate is 30%.

The company has just announced its intention to borrow an additional $1,400,000 of

perpetual debt (at a 7% p.a. interest rate) and use the proceeds to repurchase shares?

Calculate the cost of equity capital for Mitsui Ltd after the share repurchase

(ignoring other information effects).