SummerFun, LLC, is a competitor to Fun in the Sun, Inc.. SummerFun, LLC. is an all equity firm with a 13.5% cost of capital. The company is expected to maintain a perpetual cash flow. It is looking to add leverage and change its capital structure to 50% debt, 50% equity. If the cost of debt is 8.5%, there is no risk of default, and the tax rate is 20%, what is the new levered cost of equity and WACC?

ANSWER: - ReL = 17.5%

Please SHOW STEPS ON HOW TO GET THE NEW LEVERED COST OF EQUITY