Problem 19-8 WACC The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in thousands) is as follows: Short-term debt Accounts payable Current liabilities 76,600 63,000 139,600 Cash and marketable securities Accounts receivable Inventory Current assets Property, plant, and equipment Deferred taxes Other assets Total 2,500 121,000 126,000 249,500 213,000 46,000 88,000 596,500 Long-term debt 209,600 Shareholders' equity Total 247,300 596,500 The debt has an interest rate of 3.50% (short term) and 5.50% (long term). The expected rate of return on the company's shares is 12.50%. There are 7.56 million shares outstanding, and the shares are trading at 56. The tax rate is 25%. Assume the company issues 50 million in new equity and uses the proceeds to retire long-term debt. Also assume the company's borrowing rates are unchanged and the short-term debt is permanent. Use the three-step procedure. a. Calculate the cost of equity after the capital restructuring. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Cost of equity % b. Calculate the WACC after the capital restructuring. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Weighed-average cost of capital %