7. WACC (S18-1) Table 18.4 shows a simplified balance sheet for the Dutch manufacturer Rensselaer Felt. Calculate this company’s weighted-average cost of capital. The debt has just been refinanced at an interest rate of 6% (short term) and 8% (long term). The expected rate of return on the company’s shares is 15%. There are 7.46 million shares outstanding, and the shares are trading at €46. The tax rate is 25%.

⟩ TABLE 18.4 Simplified book balance sheet for Rensselaer Felt

(figures in € thousands).

Cash and marketable securities 1,500 Short-term debt 75,600 Accounts receivable 120,000 Accounts payable 62,000 Inventory 125,000 Current liabilities 137,600 Current assets 246,500 Property, plant, and equipment 212,000 Long-term debt 208,600 Deferred taxes 45,000 Other assets 89,000 Shareholders’ equity 246,300 Total 592,500 Total 592,500