Universal Foods has a debt-to-value ratio of 43%, its debt is currently selling on a yield of 5%, and its cost of equity is 9%. The corporate tax rate is 40%. The company is now evaluating a new venture into home computer systems. The internal rate of return on this venture is estimated at 13.4%.
WACCs of firms in the personal computer industry tend to average around 14%. a. What is Universal’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
WACC %