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Coffeestop primarily sells coffee. it recently introduced a premium coffee-flavored liquor (BF Liquors). suppose the firm faces a tax rate of 40% and collects the following info. if it plans to finance 14% of the new liquor-focused division with dept and the rest with equity, what WACC should it use for its liquor division? assume a cost of dept of 5.1% a risk-free rate 3.4% and a market risk premium of 5.9%
Beta Equity % Debt %
CoffeeStop 0.63 95% 5%
BF Liquors 0.23 86% 14%
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