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D. What will be Wolverine incs new cost of equity after the change in capital structure?

Assume

Risk free rate = 3% Equity market premium = 7% Tax rate = 21%

Wolverine Inc. has an equity beta of 1.2 and its cost of debt is 3%. Wolverine Inc total value is $100 million and is financed with $80 million in equity and $20 million debt that has been treated as permanent. Wolverine Inc. is considering increasing i debt by replacing $10 million of equity with $10 million in debt through an investme bank who would charge Wolverine Inc. $100,000 to process this change