Vader Enterprises stock has dropped 50% to $6 a share; there are 100 million shares outstanding. The firm also has $1.4 billion (market value) in debt outstanding (with an interest rate of 12% ) and reported earnings before interest and taxes of \$ $300 million last year; the book value of capital of the firm is $4 billion. The firm currently has a beta of 1.80 , the risk free rate is 5% and the market risk premium is 4%; the tax rate is 40%. The CEO takes issues new equity, reduces the market debt to capital ratio to 40% and reduces the interest rate on debt to 8%. Estimate the new cost of capital