Given the following:
	Book value Balance sheet, Aubrey Company
	Current Assets	5,000	Accounts Payable	4,000
	Net Fixed Assets	9,000	Accruals	2,000
			Total Current Liabilities	6,000
			Debt	4,000	rD
			Equity	4,000	rE
	Total Assets	14,000	Total Liab & Equity	14,000
	Shares of common stock:	400	16000
	Price per share:	40
	Cost of debt:	6%
	Cost of equity:	12%
	Marginal tax rate:	21%
Questions:
1. Estimate WACC.
2. Estimate WACC if the company borrows $2,000 and buys back an equal amount of stock.
The additional borrowing will increase the cost of debt to 6.8%.
HINT
	find ru	(D/V*rD+(E/V)*rE			(use current number)
	new rE	ru + (ru - new rD)*New debt/New Equity
	new WACC	New D/New V* New rD*(1-t)+New Equity/New Vlaue*New rE