Question $3(10$ points$)$

$*$ World$-$Wide Enterprises $($WWE$)$ is a large conglomerate thinking of entering the widget business, where it plans to finance projects with a debt$-$value ratio of $25$ percent $($or a debt$-$equity ratio of $1/3).$

$*$ There is currently one firm in the widget industry, American Widgets $($AW$).$ This firm is financed with $40$ percent debt and $60$ percent equity.

$*$ The beta of AW's equity is $1\mathrm{.}5.$ AW has a borrowing rate of $12$ percent, and WWE expects to borrow for its widget venture at $10$ percent. The corporate tax rate for both firms is $21$ percent, the market risk premium is $8\mathrm{.}5$ percent, and the risk$-$free interest rate is $8$ percent.

$*$ What is the WACC for WWE's widget venture?