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Spam Corp. is financed entirely by common stock and has a beta of 1.05. The firm is expected to generate a level, perpetual stream of earnings and dividends. The stock has a price-earnings ratio of 7.20 and a cost of equity of 13.89%. The company's stock is selling for $66. 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 3.5%. The company is exempt from corporate income taxes. Assume MM are correct.

1) Calculate the cost of equity after the refinancing. (Enter your answer as a percent rounded to 2 decimal places.)

2) Calculate the overall cost of capital (WACC) after the refinancing. (Enter your answer as a percent rounded to 2 decimal places.)

3) Calculate the price-earnings ratio after the refinancing. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

4) Calculate the stock price after the refinancing.

5) Calculate the stock's beta after the refinancing. (Round your answer to 1 decimal place.)

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