Ksl = Ksu + D/E *(1 - T)*(Ksu - Kd)

WACC = We*Ksl + Wd*Kd*(1 - T)

Like a Rolling Stone (LARS) has a book value of equity of $2,000 million and a book value of debt of $4,000 million. LARS industry has a cost of equity of 8%, is financed by 50% debt and 50% equity, has a tax rate of 35%, and has a cost of debt of 4%. LARS has a tax rate of 40% and has a cost of debt of 4.2%. Find LARS cost of equity and WACC.