Assume perfect cаpitаl mаrkets, where a firm's cоst оf capital (WACC) is fixed and dоes not change as wD, wS, rD and rS change. The equation for the WACC under perfect capital markets is as follows: WACC = (wD*rD) + (wS*rS) A firm with a WACC of 14% currently has debt and equity weights of 0.20 and 0.80, respectively. The cost of debt, rD, is 5.00% and the cost of equity, rS, is 16.25%. Now assume the firm announces a recapitalization where they will issue debt and use the proceeds of the debt issue to repurchase shares of stock. After the recapitalization is complete, the firm will have debt and equity weights of 0.50 and 0.50. As a result of the recapitalization, the cost of debt, rD, increases to 8%. If the WACC overall does not change, what will you expect will happen with cost of equity, rS?