Question: Hello, I need step by step solution to help me with this. The Answer Provided is 10.07% UnitedProducers(UP),anunleveragedfirm,hasatotalmarketvalueof$10million, consisting of 500,000 shares of common stock

Hello, I need step by step solution to help me with this.

The Answer Provided is 10.07%

UnitedProducers(UP),anunleveragedfirm,hasatotalmarketvalueof$10million, consisting of 500,000 shares of common stock selling at $20 per share.The beta on the stock is currently 0.7.Management is considering recapitalizing by issuing $2 million of debt (based on marketvalues)atabefore-taxcostof6%.UPwillusetheproceeds torepurchasestockatthe marketprice, whichyoumayassumedoesn'tchangeintherecapitalization.UP'staxrateis 43%, the ten-year T-bond is yielding 2.7%, and the return on the market portfolio is expected to be 14%.What will UP's new WACC be?

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