13. Your company has a debt to equity breakdown of 60% debt and 40% equity, $1,000,000 for both debt and equity. The cost of debt is 5.53% (based on the interest rate on the debt that is 7% and the tax rate is 21%). The cost of the equity is 12%. Which expected return is higher?

You may want to refer to the formulas below in order before you answer.

WACC = [%Debt (Cost of Debt)] + [%Equity (Cost of Equity)]

OR

WACC = (1-t)KDD + KEE D + E

Group of answer choices

Expected return for equity holders of your company.

Expected return for debt holders for your company

Expected returns of debt and equity are the same.