Gaucho Services starts life with all-equity financing and a cost of equity of 14%. Suppose it refinances to the following market-value capital structure:

Debt (D)	45%	at rD = 9.4%
Equity (E)	55%

Use MMs proposition 2 to calculate the new cost of equity. Gaucho pays taxes at a marginal rate of T_c = 30%. Calculate Gauchos after-tax weighted-average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Gaucho Services starts life with all-equity financing and a cost of equity of 14%. Suppose it refinances to the following market value capital structure: Debt (D) at rd = 9.4% Equity 45% 55% (E) Use MM's proposition 2 to calculate the new cost of equity. Gaucho pays taxes at a marginal rate of Tc = 30%. Calculate Gaucho's after-tax weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. After-tax WACC 12.11 %