Solution Wacc = weighted average cost of capital Kd = cost of debt Ke = cost of equity We = weight of equity Wd = weight of debt (I) ....Old Wacc = (Wd*kd) + (We*ke) = (0.29*5%) + (0.71*14%) = 1.45% + 9.94% = 11.39% Now if the weights are changed then new cost of debt = Wacc = (Wd*kd) + (We*Ke) 11.39% = (0.71*kd) + (0.29*21%) 0.71*kd = 11.39% - 6.09% = 5.3% Kd = 7.47% How do you get the answer 7.47?