Problem $2(5$ points$)$

ECOSOL is a company with a market debt$-$equity ratio of $0\mathrm{.}9.$ Suppose its current cost of debt is $\backslash (5\backslash \%\backslash ),$ and its cost of equity is $\backslash (9\backslash \%\backslash ).$ Suppose also that if ECOSOL takes some additional debt and uses the proceeds to buy some shares from the open market, which implies an increase in its debt$-$equity ratio to $1\mathrm{.}3.$ This will also increase its cost of debt to $\backslash (5\mathrm{.}5\backslash \%\backslash ).$

With perfect capital markets, what effect will this transaction have on ECOSOL cost of equity and WACC?