Here is a simplified balance sheet for Upjohn Company at the end of 2015 (dollars in millions): Current assets $1,418 $653 1,240 Current liabilities Long-term debt Shareholders' equity 472 3,130 Total Net PPE Other assets Total Other information: 656 1,821 3,130 There are 65 million shares of equity outstanding with a per share price of $18 at end of year. The equity has a beta of 1.2. Historical average risk premium is 8.0% per year and the risk-free rate is 1.4%. Newly issued Upjohn long-term debt carries a spread of 2% to the risk-free rate. The company's tax rate is 30%. (a) Calculate Upjohn's WACC. (hint: Use the CAPM and the data above and only use "Long-term debt" as debt) (b) What would Upjohn's WACC be if it moved to and maintained a 25% debt level? As a result, the spread on debt reduce to 1.6%.