Question 2 (20% marks) The next Table shows a simplified balance sheet for the Dutch manufacturer Rensselaer Felt. Cash and marketable securities 1,500 Short-term debt 75,600 Accounts receivable 120,000 Accounts payable 62,000 Inventory 125,000 Current liabilities 137,600 Current assets 246,500 Property, plant, and equipment 212,000 Long-term debt 208,600 Deferred taxes 45,000 Other assets 89,000 Shareholders' equity 246,300 Total 592,500 Total 592,500 a. Calculate this company's weighted-average cost of capital. The debt has just been refinanced at an interest rate of 6% (short term) and 8% (long term). The expected rate of return on the company's shares is 15%. There are 7.46 million shares outstanding, and the shares are trading at 46. The tax rate is 25%. (10 marks) b. How will Rensselaer's WACC and cost of equity change if it issues 50 million in new equity and uses the proceeds to retire long-term debt? Assume the company's borrowing rates are unchanged. Use the three-step procedure. (10 marks) Before starting to solve be careful; Support your answers with the appropriate calculations and justify your