Nevada Hydro is 40% debt financed and had a WACC of 9.7%: WACC = (1 - T. ), p. +re = (1 - .35)(.085) (.40) +.125(.60) = .097 Goldensacks Company is advising Nevada Hydro to issue $75 million of preferred stock at a dividend yield of 9%. The proceeds would be used to repurchase and retire common stock. The preferred issue would account for 10% of the pre-issue market value of the firm. Goldensacks argues that these transactions would reduce Nevada Hydro's WACC to 9.4%: WACC=(1-.35)(.0857.40)+.090.10)+.125(.50) = .094 or 9.4% Do you agree with the calculations? Explain. Give new calculation if you disagree