1. A firm is financed with a debt to equity ratio of 50%. The debt is risk-free debt and the risk-free rate of return is 10% p.a. The firm's cost of equity capital is 20%, and the firm's marginal tax rate is 20%. What is the firm's weighted average cost of capital? Assume a classical tax system.
2. Answer as a percentage rounded to two decimal places.
3. Hint: first compute the relative proportions of debt and equity from the d/e ratio. Note d/(d+e) = (d/e)/(1+(d/e))

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d/e ratio 0.5 debt required return 10% equity required return 20% tax rate 20%