Financial Decisions Weighted Average Cost of Capital (WACC) and Economic Value Added (EVA) Problems 1. a. Your company has a debt to equity breakdown of 60% debt and 40% equity. The cost of the debt is 5%* and the cost of the equity is 12%. What is your company's Weighted Average Cost of Capital (WACC)? Please use the short formula below for WACC. WACC = [%Debt (Cost of Debt)] + [%Equity (Cost of Equity)] b. Within your company above, the Human Resources Division has $2,500,000 in total assets, which is the total capital employed by this division. The tax rate is 30% and the Earnings Before Interest and Tax (EBIT) of Human Resources is $800,000. What is the Economic Value Added (EVA) for the Human Resources Division? *FYI: Cost of Debt = 7.14% (1-30) = 5.0%