P10-2: The table below shows a book balance sheet for the Wishing Well Motel chain. The companys long-term debt is secured by its real estate assets, but it also uses short-term bank loans as a permanent source of financing. It pays 15% interest on the bank debt and 13% interest on the secured debt. Wishing Well has 10 million shares of stock outstanding, trading at $90 per share. The expected return on Wishing Wells common stock is 19%. (Table figures in $ millions.)

Calculate Wishing Wells WACC. Assume that the book and market values of Wishing Wells debt are the same. The marginal tax rate is 21%. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

Cash and marketable securities Accounts receivable Inventory Current assets Real estate Other assets Total $ 90 250 50 $ 390 2,200 100 $ 2,690 Bank loan Accounts payable Current liabilities Long-term debt Equity Total $ $ 350 150 500 1,790 400 $ 2,690 Weighted-average cost of capital %