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 76,7ee 63, 100 139,800 Cash and marketable securities Accounts receivable Inventory Current assets Property, plant, and equipment Deferred taxes Other assets Total 2,600 121,100 126, 100 249,800 213,1ee 46,100 87.900 596,900 299,7ee Long-term debt Shareholders' equity Total 247 400 596,900 The debt has an interest rate of 6.25% (short term) and 8.25% (long term). The expected rate of return on the company's shares is 15.25%. There are 7.57 million shares outstanding, and the shares are trading at 45. 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. The debt has an interest rate of 6.25% (short term) and 8.25% (long term). The expected rate of return on the company's shares is 15.25%. There are 7.57 million shares outstanding, and the shares are trading at 45. 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 percen rounded to 2 decimal places.) Answer is complete but not entirely correct. % Cost of equity 14.08 b. Calculate the WACC after the capital restructuring. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)