Problem 17-11 MM proposition 2 Spam Corp. is financed entirely by common stock and has a beta of 1.20. The firm is expected to generate a level, perpetual stream of earnings and dividends. The stock has a price-earnings ratio of 6.90 and a cost of equity of 14.49%. The company's stock is selling for $44. Now the firm decides to repurchase half of its shares and substitute an equal value of debt. The debt is risk-free, with an interest rate of 5%. The company is exempt from corporate income taxes. Assume MM are correct. a. Calculate the cost of equity after the refinancing. (Enter your answer as a percent rounded to 2 decimal places.) b. Calculate the overall cost of capital (WACC) after the refinancing. (Enter your answer as a percent rounded to 2 decimal places.) C. Calculate the price-earnings ratio after the refinancing. (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Calculate the stock price after the refinancing. e. Calculate the stock's beta after the refinancing. (Round your answer to 1 decimal place.) % % a. Cost of equity b. Cost of capital C. Price-earnings ratio d. Stock price e. Stock's beta