You are given the following information about English Land plc. The company's equity is currently valued at 25 million. It has an equity beta of 1.33. The company also has debt on its capital structure. The debt is valued to be 20 million and assumed to be risk-free. Yields on similar safe debt are 5%. The expected return on the market portfolio is 12%.

REQUIRED:

i. Find English Land's cost of capital and cost of equity. [2 marks]

ii. The company decides to retire half of its debt at current prices. Find the company's cost of capital and cost of equity. Explain your results