need solution for 14b

14. Tool Manufacturing has an expected EBIT of $64,000 in perpetuity and a tax rate of 35%, and it has no debt but can borrow at 8.5%. The return on asset (WACC) is 15%. a). What is the cost of equity? cost of equity - WACC = 15% // b). The firm now has $95,000 in outstanding debt. What is the WACC of the firm? RE=15+ 4.15.085) (1) (1 - 35)=0, 1922