Problem 19-4 WACC Use the following information: Debt: $68,000,000 book value outstanding. The debt is trading at 89% of book value. The yield to maturity is 11%. Equity: 1,800,000 shares selling at $35 per share. Assume the expected rate of return on Federated's stock is 20% Taxes: Federated's marginal tax rate is Te -0.21. Suppose Federated Junkyards decides to move to a more conservative debt policy. A year later, its debt ratio is down to 16.75% (D/V 0.1675). The interest rate has dropped to 10.6%. The company's business risk, opportunity cost of capital, and tax rate have not changed. Use the three-step procedure to calculate Federated's WACC under these new assumptions. (Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Weighted average cost of capital