Use the data below regarding two firms, HoyaCo and Saxa Inc., to answer the following ausctinne HoyaCo plans to increase Saxa Inc.'s debt so its leverage ratio (debt to to have more leverage, which would generate additional tax shields. So, the management at is 7\%. Assume that the cost of debt is unaffected by the increased leverage. equity) is 0.35. Assume that the risk-free rate is 3%, and that the market risk premium What cost of capital do you use to value Saxa Inc.? You can assume the beta of debt 0. - The deal will create some synergies, as it is believed that much of Saxa's back office functions can be accomplished with Hoya's existing infrastructure. Analysts expect after-tax cost savings of $5 million per year, which will grow at 2% per year in perpetuity. What is the market value of equity for the merged company