In this task we are examining the current capital structure of ACME Iron and determining the WACC of the company. Assume that ACME's tax rate is 40%.

To compute the WACC you must first find the after-tax cost of debt, the cost of equity and the proportions of debt and equity in the firm. You can assume that the cost of debt before tax is 8% for the firm. Please clearly show how you derive each of these values:

ACME Iron has debt of $130 million

After-tax cost of debt =

Cost of equity =

Proportions of debt and equity in the firm =