The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in € thousands) is as follows: € 76,500 Cash and marketable securities Short-term debt € 2,400 120,900 Accounts payable...

Extracted text: The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in € thousands) is as follows: € 76,500 Cash and marketable securities Short-term debt € 2,400 120,900 Accounts payable Accounts receivable 62,900 € 139,400 Current liabilities Inventory 125,900 € 249, 200 Current assets Property, plant, and equipment Deferred taxes 212,900 45,900 88,100 Long-term debt 209,500 Shareholders' equity Other assets 247, 200 € 596,100 € 596,100 Total Total The debt has an interest rate of 3.75% (short term) and 5.75% (long term). The expected rate of return on the company's shares is 12.75%. There are 7.55 million shares outstanding, and the shares are trading at €55. The tax rate is 25%. Assume the company issues €50 million in new equity and uses the proceeds to retire long-term debt. Also assume the company's borrowing rates are unchanged and the short-term debt is permanent. Use the three-step procedure. a. Calculate the cost of equity after the capital restructuring. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Cost of equity b. Calculate the WACC after the capital restructuring. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Weighed-average cost of capital