Seven Problem 17-20 After-tax WACC 4. Gaucho Services starts life with all-equity financing and a cost of equity of 12%. Suppose it refinances to the following market- value capital structure: at ro = 10% Debt (D) Equity (E) 49% 51% 34:55:39 Use MM's proposition 2 to calculate the new cost of equity. Gaucho pays taxes at a marginal rate of Tc = 35%. Calculate Gaucho's after-tax weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) erences After-tax WACC % 14 of 14 HII Next