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11.6. A company has outstanding debt with a market value of $350M and common stock with a market value of $450M. If its debt has

11.6. A company has outstanding debt with a market value of $350M and common stock with a market

value of $450M. If its debt has a before-tax cost of 6%, a before-tax cost of equity of 12% and a

corporate tax rate of 30%, what is its WACC?

11.7. Based on the answer to #6, identify the following WACCs for this firm that might be used to evaluate

(a) a high-risk (b) an average-risk and (c) a low-risk project, respectively: 8.59%; 6.50%; and 10.00%.

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