Weighted Average Cost of Capital (WACC) [25 points]: An acquiring firm with a market capitalization (MVE) of $2,210 seeks to purchase a target firm with an MVE of $3,450. Estimate the combined firm's WACC given the following information. When aggregating betas, use the equally weighted average. Note that there are no preferred shares here! Target Firm's Comparable Companies Acquiring Firm's Comparable Companies Book Book Market Book Book Market Tax Comparable Tax Comps Bobs Value Value Debt Equity Value Equity Bobs Value Value Value Rate Companies Rate Debt Equity Equity Firm A 1.696 2,300 1,302 Firm B 1.828 1,450 1,894 2,588 27% 1,377 30% Firm D 1.737 9,312 5,599 5,677 30% Firm E 1.894 2,994 1,744 1,603 24% Firm C 1.396 680 855 1,332 25% Firm F 1.557 1,798 1,108 1,167 26% Risk Free Rate 3.00% Expected Mkt Return 8.50% Most Recent Debt Offering Default Spread 5.00% Combined Firm's Target Ratios Equity / Value 0.70 Debt/Value 0.30 Firm's Marginal Tax Rate 24%