ALTERNATIVE $1$: $50\%$ debt and $50\%$ equity Solution: WACCA$1=0\mathrm{.}50((0\mathrm{.}05)(1-0\mathrm{.}30))+(0\mathrm{.}50)(0\mathrm{.}12)=0\mathrm{.}50(0\mathrm{.}035)+0\mathrm{.}06=0\mathrm{.}0175+0\mathrm{.}06$WACCA$1=0\mathrm{.}0075$ x $100\%$ WACCA$1=7\mathrm{.}75\%$ ALTERNATIVE $2$: $30\%$ debt and $70\%$ equity Solution: WACCA$2=0\mathrm{.}30((0\mathrm{.}05)(1-0\mathrm{.}30))+(0\mathrm{.}70)(0\mathrm{.}12)=0\mathrm{.}30(0\mathrm{.}035)+0\mathrm{.}084=0\mathrm{.}0105+0\mathrm{.}084$ WACCA$2=0\mathrm{.}0945$ x $100\%$ WACCA$2=9\mathrm{.}45\%$ What are the potential trade$-$offs between risk and return for each capital structure?