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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

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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 14% 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 5.2%, a risk-free rate of 3.1%, and a market risk premium of 6.4% Bota % Equity % Debt CoffeeStop 0.58 4% BF Liquors 0.28 86% 14% 96% Note: Assume that the firm will always be able to utilize its full interest tax shield The weighted average cost of capital is % (Round to two decimal places.)

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