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The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in € thousands) is as...

The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in € thousands) is as follows

Cash and marketable securities 2,700 Short-term debt 76,800
Accounts receivable 121,200 Accounts payable 63,200
Inventory 126,200 Current liabilities 140,000
Current assets 250,100
Property, plant, and equipment 213,200 Long-term debt 209,800
Deferred taxes 46,200
Other assets 87,800 Shareholders' equity 247,500
Total 597,300 Total 597,300


The debt has an interest rate of 6.50% (short term) and 8.50% (long term). The expected rate of return on the company's shares is 15.50%. There are 7.58 million shares outstanding, and the shares are trading at €44. The tax rate is 25%. Assume the company issues €50 million in new equity and uses the proceeds to retire long-term debt. Also assume the company's borrowing rates are unchanged and the short-term debt is permanent. Use the three-step procedure.

a. Calculate the cost of equity after the capital restructuring. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. Calculate the WACC after the capital restructuring. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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