A firm is analyzing its capital structure. The company has a debt ratio of 40% and equity ratio of 60%. The cost of debt is 6% and the cost of equity is 12%. The tax rate is 30%. Calculate the company's weighted average cost of capital (WACC).

Requirements:

1. Compute the WACC.
2. Explain the impact of an increase in the cost of debt to 8% on the WACC.
3. Assess how the WACC would change if the company's tax rate increased to 35%.
4. Discuss the implications of WACC for investment decisions.