Question 6 4.5 pts You want to estimate the weighted average cost of capital for a privately held footwear company, Mercury Athletic Footwear (MA). To do so, you collected the following data on another footwear company, General Shoe Corp (GS), which is publicly traded, and which maintains a target D/E ratio. Equity beta Debt beta Number of Price per shares share General Shoe Corp. 1.8 0.2 20 million $10 The market value of General Shoe's debt is $200 million. General Shoe also has $20 million in cash, but all the cash is required for normal business operations. The risk-free rate is 5% and the market risk premium is 5%. Use the information above to estimate MA's WACC. Assume that MA maintains a target D/E ratio of 0.3 and that its debt cost of capital is 5%. MA's corporate tax rate is 20%. Please write your final answer in percentage point with 2 digits after the decimal point. To obtain partial credit, you can show your calculations on the next page. Question 6 4.5 pts You want to estimate the weighted average cost of capital for a privately held footwear company, Mercury Athletic Footwear (MA). To do so, you collected the following data on another footwear company, General Shoe Corp (GS), which is publicly traded, and which maintains a target D/E ratio. Equity beta Debt beta Number of Price per shares share General Shoe Corp. 1.8 0.2 20 million $10 The market value of General Shoe's debt is $200 million. General Shoe also has $20 million in cash, but all the cash is required for normal business operations. The risk-free rate is 5% and the market risk premium is 5%. Use the information above to estimate MA's WACC. Assume that MA maintains a target D/E ratio of 0.3 and that its debt cost of capital is 5%. MA's corporate tax rate is 20%. Please write your final answer in percentage point with 2 digits after the decimal point. To obtain partial credit, you can show your calculations on the next page