xploration currently has 6% after-tax cost of debt and a 12% cost of common stock. The company does not have any preferred stock outstanding. - What is American Exploration's current WACC? Assuming that its cost of debt and equity remain unchanged, what will be American Exploration's WACC under the revised target capital structure? Do you think shareholders are affected by the increase in debt to 80% ? If so, how are they affected? Are the common stock claims riskier now? What does your answer in part d suggest about the tradeoff between financing with debt versus equity