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 10 % . However, the new business will be 27 % debt financed, and you anticipate its debt cost of capital will be 6 % . If its corporate tax rate is 33 % , what is your estimate of its WACC?

The equity cost of capital is:

The weighted average cost of capital is: