Colt Manufacturing has two divisions: 1) pistols; and 2) rifles. Betas for the two divisions have been determined to be beta

(pistol)=0.5

and beta

(rifle)=1.0.

The current risk-free rate of return is

3.5%,

and the expected market rate of return is

10%.

The after-tax cost of debt for Colt is

2.5%.

The pistol division's financial proportions are

45.0%

debt and

55.0%

equity, and the rifle division's are

55.0%

debt and

45.0%

equity.

a. What is the pistol division's WACC?

b.What is the rifle division's WACC?

a. What is the pistol division's WACC?

nothing%

(Round to two decimal places.)

b.What is the rifle division's WACC?

nothing%

(Round to two decimal places.)

Colt Manufacturing has two divisions: 1) pistols; and 2) rifles. Betas for the two divisions have been determined to be beta

(pistol)=0.5

and beta

(rifle)=1.0.

The current risk-free rate of return is

3.5%,

and the expected market rate of return is

10%.

The after-tax cost of debt for Colt is

2.5%.

The pistol division's financial proportions are

45.0%

debt and

55.0%

equity, and the rifle division's are

55.0%

debt and

45.0%

equity.

a. What is the pistol division's WACC?

b.What is the rifle division's WACC?

a. What is the pistol division's WACC?

nothing%

(Round to two decimal places.)

b.What is the rifle division's WACC?

nothing%

(Round to two decimal places.)