Question: WACC = .30 x . 07(1 - .40) + .70 x . 1276 = .1019 ~ 10.2% where Ry = .07 is the rate at

WACC = .30 x . 07(1 - .40) + .70 x

WACC = .30 x . 07(1 - .40) + .70 x . 1276 = .1019 ~ 10.2% where Ry = .07 is the rate at which PacTelCom can borrow from its banks; T. = 40% is the firm's marginal corporate tax rate; D = 30% and E = 70% are PacTelCom (D+E) (D+E) financing ratios where D and E are the amount of debt and equity taken from the firm's most recent balance sheet; and Re = .1276 is PacTelCom's cost of equity. The cost of equity

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