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Mueller investigations, Inc., currently has the following financial and market information: % Debt in capital structure = 0% % Equity in capital structure = 100%

Mueller investigations, Inc., currently has the following financial and market information:

% Debt in capital structure = 0%

% Equity in capital structure = 100%

Beta = 1.1

Risk free rate = 4%

Market risk premium = 6%

Tax rate = 25%

Mueller is considering recapitalizing to a capital structure of 40% debt and 60% equity. Mueller's bankers say if it does so, then the yield on the debt it must issue will be 7%. Mueller believes that the Hamada expression for levered returns is most applicable to the company's situation. What will be Mueller's WACC after the recapitalization?

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