The 3N Inc. is unlevered and is valued at $640,000. Its’ current beta is equal to 1.2. The risk free rate is 4% and the market risk premium is 6%. 3N is currently deciding whether including debt in its capital structure would increase its value. Under consideration is issuing $300,000 in new debt with an 8% interest rate. 3N would repurchase $300,000 of stock with the proceeds of the debt issue. There are currently 32,000 shares outstanding and its effective marginal tax bracket is 35%. What will 3N’s new WACC be?
Please provide a step by step answer with explanation including any formulas used.