How would you expect the weighted average cost of capital

Question

• How would you expect the weighted average cost of capital (WACC) to differ if you had used market values of equity rather than the book value of equity, and why?
• What would you expect would happen to the cost of equity if you had to raise it by selling new equity, and why?
• If the after-tax cost of debt is always less expensive than equity, why don't firms use more debt and less equity?
• What are some of the advantages and disadvantages of raising capital by using debt?
• How would "floatation costs" impacted the WACC, and how could they have been incorporated in the formula?