Vu Games and Game On! are identical firms except for their capital structures. Vu Games is an unlevered firm with $680,000 of equity. Game On! is a levered firm with $425,000 of equity and $255,000 of debt at an interest rate of 6.2 percent. Both Vu Games and Game On! have an expected EBIT of $84,000. Ignore taxes. Vu Games has a WACC of __________ percent and Game On! has a WACC of __________ percent.

Multiple Choice

• 12.35; 12.35

• 16.10; 14.10

• 12.35; 14.10

• 14.10; 14.10

• 12.35; 11.05