The following data pertains to Zonk Corp., a manufacturer of ball bearings (dollar amounts in millions):

- Assume that Zonk is a potential leveraged buyout candidate.

- Assume that the buyer intends to put in place a capital structure that has 70 percent debt and 30 percent common equity.

- The pre-tax cost of debt will be 14%

- The riskless rate is 4.6% and the Market risk premium is 7.3%

Question: Compute the after-tax weighted average cost of capital for Zonk based on the new capital structure?

Total assets Interest-bearing debt Average pre-tax borrowing cost Common equity: $7,460 $3,652 10.5% $2,950 $13,685 3590 1.13 Book value Market value Income tax rate Market equity beta