Ecofuel Corporation has no debt but can borrow at 6.7 percent. The firms WACC is currently 8.9 percent and the tax rate is 25 percent.

a. What is the companys cost of equity?

b. If the firm converts to 40 percent debt, what will its cost of equity be?

c. If the firm converts to 65 percent debt, what will its cost of equity be?

d-1. If the firm converts to 40 percent debt, what is the companys WACC?

d-2. If the firm converts to 65 percent debt, what is the companys WACC?

		8.9%; 10.0%; 12.0%; 8.0%; 7.5%
		8.6%; 12.1%; 10.1%; 9.2%; 7.8%