Polar Polar Inc. (PPI) has a capital structure consisting of 30% debt and 70% equity. PPI's debt currently has a 7% yield to maturity. The risk-free rate (rRF) is 5.5% and the market risk premium (RPM) is 5%. Using the CAPM, PPI estimates that its cost of equity is currently 11.75%. The company has a 35% tax rate.

PPI's financial staff is considering changing its capital structure to 45% debt and 55% equity. If the company went ahead with the proposed change, the yield to maturity on the company's bonds would rise to 8.75%. The proposed change will have no effect on the company's tax rate. What would be the company's new WACC if it adopted the proposed change in capital structure?

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