Olsen Company is looking to find its WACC for a proposed acquisition with Babcock Inc. You are a Financial Analyst for Olsen Company, which is public, and your boss has ask you to come up with the WACC for the deal with Babcock. Given the information below, what WACC should you use?

Olsen's book value of equity is 60% of its overall capital structure, with debt at 40%. The company plans on using leverage for the Babcock deal, which will increase debt to 55% and common equity to 45% of the overall capital structure. Olsen has no preferred stock.

Olsen plans on using bonds to increase leverage for the Babcock deal. Currently on their balance sheet they have 20-year, 6% coupon, semiannual payment non-callable bonds, which are currently selling for $918 (face value is $1,000). The new bonds for the Babcock deal will be placed with no flotation cost.

The current 10 year Treasury bond is at 2.7%, and the overall market return is estimated at 8%. Olsen's beta is 1.4 with a projected tax rate of 27%.