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 8%. ?However, the new business will be 23% debt?financed, and you anticipate its debt cost of capital will be 5%. If its corporate tax rate is 40%, what is your estimate of its? WACC?
1. The equity cost of capital is %? (Round to one decimal place)
2. The weighted average cost of capital is %? (Round to one decimal place)