Problem $7$:

Your boss, whose background is in financial plan$-$

ning, is concerned about the company's high$-$

weighted average cost of capital of $21\%.$ He has

asked you to determine what combination of debt$-$

equity financing would lower the company's

WACC to $13\%.$ If the cost of the company's equity

capital is $6\%$ and the cost of debt financing is $28\%,$

what debt$-$equity mix would you recommend?