4. Crazy Soccer is the CFO of Bayern Gas, a large German manufacturer of industrial, commercial, and consumer gas products. Bayern Gas is privately owned, and its shares are not listed on an exchange. The CFO has appointed Funny Soccer, CFA, of Crystal-Clear Valuation Advisors, a third-party valuator, to perform a stand-alone valuation of Bayern Gas. Funny had access to the following information to calculate Bayern Gas' weighted average cost of capital: The nominal risk-free rate is 4.5 percent. The average long-term historical equity risk premium in Germany is assumed at 5.7 percent Bayern Gas' corporate tax rate is 38 percent. Bayern Gas' target debt-to-equity ratio is 0.7. Bayern is operating at its target debt-to-equity ratio. Corporate Finance Bayern Gas' cost of debt has an estimated spread of 225 basis points over the risk free rate Exhibit 1 supplies additional information on comparable firms for Bayern Gas. EXHIBIT 1 Information on comparable Comparable Tax Rate Market Cap (in mln) Debt (in mln) B/S Beta Manchester Gass 30.0 4,500 6,000 1.33 1.45 Barcelona Gas 30.3 9.300 8,700 0.94 0.75 Real Madrid Gas 30.5 7,000 7,900 1.13 1.05 Question Based only on the information given, calculate Bayern Gas' WACC.