mem proposition "Example$-$In class

Rabis Inc. is a technological firm that is considering seeking external financing for some upcoming projects. The financing reeded is ps million. The project will commence in the next operating cycle, and the company would like to becure finanang by then. The current DIE is $0\mathrm{.}75,$ and the curicent market value of equity is $$20$ million. The external borrowing will be ubert to repurchase $$5$ millon of firm equity The cost of debt on finanaing will be fixed at $6\%,$ any the current weighted huerage cost of capital is $12\%$ Corporate tax is $21\%,$ and the required retum on equity is $11\%$

Using m&m proprosition II with taxes calculate the cost of levere equity to two decimal places.