CoffeeStop primarily sells coffee. It recently introduced a premium coffee-flavored liquor (BF Liquors). Suppose the firm faces a tax rate of

38%

and collects the following information. If it plans to finance

12%

of the new liquor-focused division with debt and the rest with equity, what WACC should it use for its liquor division? Assume a cost of debt of

5.4%,

a risk-free rate of

2.2%,

and a market risk premium of

6.7%.

	Beta	% Equity	% Debt
CoffeeStop	0.63	96%	4%
BF Liquors	0.24	88%	12%

The weighted average cost of capital is

%.

(Round to two decimal places.)