Problem $16-15$ MM and Taxes $[$LO$2]$

Fields & Company expects its EBIT to be $$147,000$ every year forever. The firm can

borrow at $9$ percent. The company currently has no debt, and its cost of equity is $12$

percent and the tax rate is $21$ percent. The company borrows $$192,000$ and uses the

proceeds to repurchase shares.

a$.$ What is the cost of equity after recapitalization? $($Do not round Intermedlate

calculatlons and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,$

$32\mathrm{.}16.)$

b$.$ What is the WACC? $($Do not round Intermedlate colculatlons and enter your answer

as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$