Question Drew Inc. is currently all-equity financed, with a cost of equity of 8.00% and a 20% tax ra

Question

Drew Inc. is currently all-equity financed, with a cost of equity of 8.00% and a 20% tax rate. Using Model 2, find what Tulane Co.’s cost of equity will be if it borrows $10,000, given a YTM on its debt of 5.25%. After borrowing, Tulane Co.’s equity value will be $25,000. Give the answer in percent to 2 decimal places (e.g., if the answer is 1.23%, give it as 1.23).