Western's Companys beta is 1.87. The Treasury bond rate is 2.58 percent. The return to the market is 12.3 percent. The company just paid a dividend of $1.23. The shares sell for $21.00. The dividends are expected to show a growth rate of 6.1%.

1. The company has a debt equity ratio of .37. What is the percent of debt and percent of equity in the company.

2. Calculate the companys WACC using the results from question 1.

3. Suppose the company wants to use 27 percent equity and73 percent debt. What is the companys new WACC?

4. Why did the companys weighted average cost of capital change in questions 2 and 3? Hint: do not say the weights changed