A company's capital structure consists of the following. Determine the Weighted Average Cost of Capital (WACC) if the cost of equity is 12% and the cost of debt is 6%. The corporate tax rate is 30%.

Capital Structure:

• Equity: $400,000
• Debt: $200,000

Requirements:

1. Calculate the proportion of equity and debt in the capital structure.
2. Calculate the after-tax cost of debt.
3. Calculate the WACC.
4. Explain the importance of WACC in capital budgeting decisions.