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, 800 63,200 140,000 Cash and marketable securities Accounts receivable Inventory Current assets Property, plant, and equipment Deferred taxes Other assets Total 2,700 121,200 126,200 250, 100 213,200 46.200 87,800 597,300 Long-term debt 209,800 Shareholders' equity Total 247,500 597,300 The debt has an interest rate of 6.50% (short term) and 8.50% (long term). The expected rate of return on the company's shares is 15.50%. There are 7.58 million shares outstanding, and the shares are trading at 44. 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.) Answer is complete and correct. Cost of equity 14.59% b. Calculate the WACC after the capital restructuring. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Weighed-average cost of capital 9.51 %