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Yates Inc. is currently an all equity firm, but the company can borrow at 7.5 percent interest. The company currently has one million shares outstanding,

Yates Inc. is currently an all equity firm, but the company can borrow at 7.5 percent interest. The company currently has one million shares outstanding, and you estimate the company's WACC is currently 9.3 percent, and the tax rate is 35 percent.

If the firm converts to 15 percent debt and receives tax exempt status, what will its new cost of equity be?

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