Using the following information and the 2019 financial statements, calculate Thalassa Cosmetics WACC.

Short-term debt is permanent in nature. The company currently pays 6.25%. Short-term debt is valued at par (ignore flotation costs for short-term debt). Long-term debt consists of 15 year 6.85% coupon bond paid semi-annually. The bonds currently trade at 102.20. Flotation cost for long-term debt equals 1%.

Market value debt- to - equity ratio is 0.6:1 (with debt = short term and long term interest paying debt)

Thalassa Cosmetics shares are not listed, but similar public companies have a beta equal to 1.4. Main brokerage houses expect the market risk premium to be 3.6%. Assume that no new equity would be issued. To estimate the cost of equity, only use the CAPM approach.

1-year Canadian government bonds are yielding 5%

10-year Canadian government bonds are yielding 5.6%

Inflation is currently running at 1.2%.

65,511 (in S, thousands) Sales Cost of Goods sold Distribution expense Administrative expense Interest expense Earnings before taxes Taxes (30%) Net Income Thalassa Cosmetics Corp. Income statement for year ended December 31st, pro forma 2020 2019 %Sales 2018 Sales 249,175 191,673 150,279 114,629 88,673 46.3% 43.6% 56,196 41,627 21.7% 35,743 23.896 32,677 25,136 13.196 20,443 13.6% 3,467 3,474 2,535 42,205 32,763 26,047 12,662 9,829 7,814 29,544 22,934 18,233 2017 Sales 109,824 47880 43.6% 25,697 23.496 13.0% 3,076 18,861 5,658 13,203 14,310 Cash and equivalent Short-term investments Accounts receivable Inventories Other current assets Net Fixed Assets Total Assets Thalassa Cosmetics Corp. Balance Sheet as at December 31st, pro forma 2020 2019 %Sales 2018 Sales 816 628 0.39 447 0 0 37,376 34,431 18.0% 23,787 15.8% 49,835 49,994 26.1% 43,529 29.0% 16,184 12,449 6.5% 11,176 7.4% 114,254 76,254 39.8% 59,284 39.496 218,465 173,756 138,223 2017 Sales 311 0 12,165 11.1% 30,368 27.7% 9,075 8.396 40,880 37.296 92,799 (in S, thousands) Accounts payable Short term debt Accruals Other current liabilities Long-term debt Shareholders' equity Total Liabilities and SE pro forma 2020 23,590 46,677 5,824 7,921 6,666 115,329 206,007 2019 %Sales 18,146 9.5% 46,677 24.4% 4,480 2.3% 6,093 3.2% 6,666 3.5% 91,694 47.8% 173,756 2018 %Sales 12,099 8.1% 25,623 17.1% 3,656 2.4% 5,686 3.8% 4,524 3.096 86,635 57.6% 138,223 2017 %Sales 11,150 10.2% 32,182 29,3% 3,080 2.8% 3,539 3.2% 7,788 7.1% 35,060 31.9% 92,799 * SE stands for Shareholders' equity