4. WACC (S18-1) Suppose Federated Junkyards decides to move to a more conservative debt policy. A year later, its debt ratio is down to 15% (D/V = 0.15). The pre-tax cost of debt has dropped to 8.6%. Recalculate Federated’s WACC under these new assumptions. The company’s business risk, opportunity cost of capital, and tax rate have not changed. Use the threestep procedure explained in Section 18-3.