Problem $16-11$ MM proposition $2$

Spam Corporation is financed entirely by common stock and has a beta of $1\mathrm{.}20.$ The firm is expected to generate a level, perpetual stream of earnings and dividends. The stock has a price$-$earnings ratio of $6\mathrm{.}90$ and a cost of equity of $14\mathrm{.}49\%.$ The company$$s stock is selling for $$44.$ Now the firm decides to repurchase half of its shares and substitute an equal value of debt. The debt is risk$-$free, with an interest rate of $5\%.$ The company is exempt from corporate income taxes. Assume MM are correct.

Calculate the cost of equity after the refinancing.

Note: Enter your answer as a percent rounded to $2$ decimal places.

Calculate the overall cost of capital $($WACC$)$ after the refinancing.

Note: Enter your answer as a percent rounded to $2$ decimal places.

Calculate the price$-$earnings ratio after the refinancing.

Note: Do not round intermediate calculations. Round your answer to $2$ decimal places.

Calculate the stock price after the refinancing.

Calculate the stock$$s beta after the refinancing.

Note: Round your answer to $1$ decimal place.