You would like to estimate the weighted average cost of capital for a new airline business. Based on its industry asset beta, you have already estimated an unlevered cost of capital for the firm of 9%. However, the new business will be 25% debt financed, and you anticipate its debt cost of capital will be 7%. If its corporate tax rate is 34%, what is your estimate of its WACC? Question content area bottom

Part 1 The equity cost of capital is enter your response here %

Part 2 What is your estimate of its WACC?