A firm has an unlevered cost of equity of rho $=11\mathrm{.}25\%.$ The cost of debt is $5\%.$ The tax rate is $T=20\%.$ EBIT $=5,625,000($constant

and perpetual$).$ There are $1M$ shares outstanding. The firm has $$20,000,000$ in debt.

a$.$ WACC for the unlevered firm is $11\mathrm{.}25\%$

b$.$ The levered cost of equity is $15\mathrm{.}42\%$

c$.$ Even though the cost of equity increases as debt is added, WACC is lower because debt is tax deductible

d$.$ WACC$=10\mathrm{.}23\%$

e$.$ All of the above