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Problem 13-14 Project Discount Rate (LO2) Universal Foods has a debt-to-value ratio of 45%, its debt is currently selling on a yield of 7%, and

Problem 13-14 Project Discount Rate (LO2)

Universal Foods has a debt-to-value ratio of 45%, its debt is currently selling on a yield of 7%, and its cost of equity is 11%. The corporate tax rate is 40%. The company is now evaluating a new venture into home computer systems. The internal rate of return on this venture is estimated at 13.4%. WACCs of firms in the personal computer industry tend to average around 14%.

a. What is Universals WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) (% ? )

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