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Homework: Chapter 13- HW Score: 0 of 3 pts 12 of 13 (10 complete) HW Score: 52.5%, P 13-23 (similar to) Question Coffee Stop primarily
Homework: Chapter 13- HW Score: 0 of 3 pts 12 of 13 (10 complete) HW Score: 52.5%, P 13-23 (similar to) Question Coffee Stop primarily sells coffee. It recently introduced a premium coffee-flavored liquor (BF Liquors). Suppose the firm faces a tax rate of 35% and collects the following information. If it plans to finance 15% 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 51% a risk tree rate of 2.1%, and a market risk premom of 5% Beta %Equity % Debt CoffeeStop 0.61 96% BF Liquors 0.26 85% 15% 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)
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