The Camaggi Corp. has a target capital structure consisting of 75% common equity and 25% debt. Its corporate income tax rate (federal + state combined) = 25%. Today, if Camaggi were to sell new bonds to the investing public, investors would require an annual return on those bonds = 7% per year. The current annual return on risk-free U.S. government securities = 5.5% per year, and the market risk premium is estimated to = 4%. Assume Camaggi's Beta = 1.2. What is your estimate of Camaggi's WACC? Show how you derive your answer.

The Camaggi Corp. has a target capital structure consisting of 75% common equity and 25% debt. Its corporate income tax rate (federal + state combined) =25%. Today, if Camaggi were to sell new bonds to the investing public, investors would require an annual return on those bonds =7% per year. The current annual return on risk-free U.S. government securities =5.5% per year, and the market risk premium is estimated to =4%. Assume Camaggi's Beta =1.2. What is your estimate of Camaggi's WACC? Show how you derive your