Please include on Excel spreadsheet how you arrived to solution.

Holland Auto Parts is considering a merger with Workman Car Parts. Workman's market-determined beta is 0.9, and the firm currently is financed with 20% debt, at an interest rate of 8%, and its tax rate is 25%. If Holland acquires Workman, it will increase the debt to 60%, at an interest rate of 9%, and the tax rate will increase to 35%. The risk-free rate is 6% and the market risk premium is 4%. What will Workman's required rate of return on equity be after it is acquired?

Calculate the current required return to Workman's equity: r_K = r_RF + b(RP_M) = 6% + (0.9)4% = 9.6%. Calculate Workman's unlevered cost of equity: r_sU = w_dr_d + w_sr_s = 0.20(8%) + 0.80(9.6%) = 9.28%. Calculate Workman's levered cost of equity at the new capital structure with the new cost of debt: r_sL = r_sU + (r_sU r_d)(D/S) = 9.28% + (9.28% 9%)/(0.6/0.4) = 9.7%.