$9-15$: Assume that a company has a target debt$-$to$-$equity capital structure of $2.$ The company

currently pays $8\%$ annually on its bonds. There are $10$ years until maturity, and the bonds

currently trade at $93\%$ of par. Bond flotation costs are $3\%.$ The company's beta is $1\mathrm{.}5,$ the RPm

$=4\%,rRF=5\%$ and the company's tax rate $=30\%.$

a$.$ Calculate the WACC.

b$.$ Assume that the company changed its target capital structure to $47\%$ long$-$term debt,

$20\%$ preferred stock, and $33\%$ common stock. If preferreds are issued at $$25,$ pay a

dividend of $7\%,$ and have flotation costs of $5\%,$ recalculate the company's WACC.

c$.$ Briefly explain why the WACC has changed.