CoffeeStop primarily sells coffee. It recently introduced a premium coffee-flavored liquor (BF Liquors). Suppose the firm faces a tax rate of 35 % 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 4.7 %, a risk-free rate of 2.7 %, and a market risk premium of 5.4 %.

Coffee Stop BF Liquors Beta 0.62 0.27 % Equity 95% 88% % Debt 5% 12% 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.)