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

10%

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

4.9%,

a risk-free rate of

2.3%,

and a market risk premium of

5.5%.

	Beta	% Equity	% Debt
CoffeeStop	0.59	96%	4%
BF Liquors	0.24	90%	10%

The weighted average cost of capital is

nothing%.

(Round to two decimal places.)