Question: Bubble Memory Technology (BMT) is an all-equity firm with a cost of equity of 14%. It refinances to the following market value capital structure:

Bubble Memory Technology (BMT) is an all-equity firm with a cost of equity of 14%. It refinances to the following market value capital structure: {D 40% and E 60% of firm value}. Cost of debt (rp) = 9%. The marginal corporate tax rate is 40% (a) What is BMT's cost of equity after refinancing? (b) What is BMT's WACC after refinancing?

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