Your firm is considering purchase of a $50,000 machine. The firm is going to find the machine with $10,000 worth of bank debt, which will carry a rate of 8.1%. The remainder will be split between common stock and coupon bonds. If the remaining amount is split equally, the cost of the coupon bonds is 7.8% and the cost of the common stock is 9.1%.

Then, for every $1,000 increase in coupon bonds (and corresponding decrease in common stock) used in the funding, the cost of the bonds increases by .2% and the cost of equity increases by .1%. The firms tax rate is 21%. Given this, calculate the WACCs for the following three capital structure choices? (20pts)

WBD	WCS	WCB	WACC
.20	.40	.40
.20	.30	.50
.20	.20	.60