Assume that you have been hired as a consultant by Bania Corporation to estimate their weighted average cost of capital. Banias stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 10-year, 7.10% bonds with semiannual payments are selling for $825.00. Their beta is 1.25, the yield on a 1-year Treasury bill is 3.75%, and the yield on a 10-year Treasury bond is 5.50%. The market risk premium is 6% and their tax rate is 25%. Finally, Krugers optimal capital structure is 25% debt and 75% equity.

1. What is Krugers WACC?
2. How could Kruger lower their WACC? Provide 2 things the company could do.