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Hey I need help with this problem, if you can provide detail on how you got the answer thats be great! CoffeeStop primarily sells coffee.
Hey I need help with this problem, if you can provide detail on how you got the answer thats be great!
CoffeeStop primarily sells coffee. It recently introduced a premium coffee-flavored liquor (BF Liquors). Suppose the firm faces a tax rate of 22% and collects the following information. If it plans to finance 14% of the new liquor-focused division with debt and the rest with equity, what WACC should it use for its liquor division? Assume a cost of debt of 4.8%, a risk-free rate of 2.1%, and a market risk premium of 5.3%. Note: Assume that the firm will always be able to utilize its full interest tax shield. The weighted average cost of capital is \%. (Round to two decimal places.) Step by Step Solution
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