A firm with a corporatewide debt-to-equity ratio of 1:2, an after-tax cost of debt of 7%, and

Question:

A firm with a corporatewide debt-to-equity ratio of 1:2, an after-tax of 7%, and a capital of 15% is interested in pursuing a foreign project. The debt capacity of the project is the same as for the company as a whole, but its systematic risk is such that the required return on equity is estimated to be about 12%. The after-tax is expected to remain at 7%.
a. What is the project's weighted average cost of capital? How does it compare with the parent's WACC?
b. If the project's equity beta is 1.21, what is its unlevered beta?

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...