Wellington Gas has a target capital structure of 60 percent common equity and 40 percent debt. The cost of new equity (external equity) is 18 percent. The cost of debt up to $2,000,000 is 8% and above $2,000,000 is 12%. Wellington has no retained earnings this year and its tax rate is 21 percent.

1. What is the debt break point?
2. What is the weighted average cost of capital before the debt break point
3. What is the weighted average cost of capital after the debt break point?