Happy Corp. is all-equity-financed. The expected rate of return on the company's shares is 15%. If the company recapitalizes by issuing debt and targets a 30% debt-to-total capital (D/((D+E)=.30), what is Happy Corp.'s new weighted average cost of capital? Assume the borrowing rate is 8% and the tax rate is 40%.

Note: Number expressed as % (ie 10% =10).

Round to nearest 1 decimal.

Selected Answer: 11.9 Response Feedback: Incorrect. Remember to calculate the ReL first and then use that levered equity value to recalculate the WACC