Capital Structure Problem

Given the following information, please estimate the WACC of the company, with all assumptions clear with reasoning.

Capital Structure Problem Hashenfield Lawn Company (HLC) Inc. is an importer, manufacturer and distributor of natural (organic) lawn care products from around the world. The company is privately owned. Of the 500,000 shares outstanding, 450,000 are owned by the founder of the company, Jack Lew. The rest are owned by various employees. HLC has a perpetual debt with a par value of $2.5 million and coupon rate of 8 percent. However, interest rates have increased and now the debt has a 9 percent yield-to-maturity. Annual before-tax operating cash flows for the year just ended were $1.5 million. The corporate tax rate was 35 percent. Here is some information, as th the CFO: Company Debt/Equity Ratio Current Debt Yield-to- Maturity 9.0% 15.9 12.5 9.0% All Lawn Chemicals Foods -manufacturer and distributor of standard and organic lawn chemicals Integrated Manufacturing - its chemical division manufactures lawn chemicals, accounting for 15% of Integrated's total sales. Other divisions include clothing and steel manufacturing Assume that markets are perfect except for the existence of corporate taxes of 35% Task: Estimate the Weighted Average Cost of Capital (WACC) for this corporation. Please make any assumptions clear and give your reasoning