Question

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

Cash and marketable securities	€	2,800		Short-term debt	€	76,900
Accounts receivable		121,300		Accounts payable		63,300
Inventory		126,300		Current liabilities	€	140,200
Current assets	€	250,400
Property, plant, and equipment		213,300		Long-term debt		209,900
Deferred taxes		46,300
Other assets		87,700		Shareholders' equity		247,600
Total	€	597,700		Total	€	597,700

The debt has just been refinanced at an interest rate of 6.75% (short term) and 8.75% (long term). The expected rate of return on the company's shares is 15.75%. There are 7.59 million shares outstanding, and the shares are trading at €43. The tax rate is 25%.

Calculate this company's weighed-average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Weighed-average cost of capital

%

Answer 1