5. You are CFO of a major manufacturing firm. Your firms capital structure is 65% debt and 35% equity. Your beta is 0.79 and your debt is rated BBB+.

A political consultant predicts that the outcome of the recent elections will lead to:

1) an increase in the U.S. corporate tax rate and 2) an increase in the U.S. Treasury rates.

Considering both effects simultaneously, how will the outcome of the election most likely affect your firms weighted average cost of capital (WACC)? No calculations necessary.