The common stock and debt of Windows Phone Corp. are valued at $70 million and $38 million, respectively. Investors currently require a 12% return on the common stock and an 8% return on the debt. There are no taxes.

The WACC is 10.59%.

If Windows Phone Corp. issues an additional $12 million of debt and uses this money to retire common stock, what will be the expected return on the stock? Assume that the change in capital structure does not affect the risk of the debt, and recall that the WACC under the initial capital structure is 10.59%