What will be angel wacc after the recapitalization

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Angel's Bangles, a sweatshop specializing in Excel programming and jewelery manufacturing, is considering a recapitalization. It currently has 60.0% debt yielding 9.0%. It's stock is risky because of all of that debt, with a beta of 1.8. It's tax rate is 40%. Angel's would like to reduce its debt down to 20.0% of its capital structure and figures it can reduce its cost of debt to 7.0% with this change. The risk free rate is 4.0% and the market risk premium is 6.0%. What will be Angel's WACC after the recapitalization? Hint: Hamada's formula will be useful.

Reference no: EM132008824

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