[Q: 16-3199011] MM Prop II (w/taxes). An all-equity firm expects its EBIT to be $305,000 every year, in perpetuity. Its cost of unlevered equity is 10.1%, its cost of debt is 6.3% and it faces a corporate tax rate of 22%. The firm plans to adjust its capital structure by issuing $500,000 in perpetual debt and using the proceeds to repurchase shares. Assume the EBIT is not affected by this recapitalization. What is this firm's cost of levered equity after the recapitalization? This firm's cost of levered equity (Rs) is % A. 11.72 B. 10.85 C. 10.63 D. 10.20 E. 11.28