Basic variables North South

Cost $ 6 million $15 million

Life 15 years 15 years

Expected return 8%15%

Least cost financing

Source Debt Equity

Cost (after-tax) 7% 16%

Decision

Action Invest Don't invest

Reason 8%>7%cost 15% < 16% cost

I am able to answer a, b, and c. I need help with this part. I cannot figure out which formula to use. Can you help?

d) If the firm maintains a capital structure containing 40% debt and 60% equity, find its weighted average cost using the data in the table.