You are now planning to establish ABC Company which requires total investment of $8 million. Assume interest rate on borrowing (before tax) is 3%, cost of equity is 8% and tax rate is 30%. ('1) Calculate the company's weighted average cost of capital (WACC) when debt is $3 million and equity is $5 million. Answer should be in percentage and like the example after rounding off the second decimal point.

(2) If the company does not use any debt, what would be the level of weighted average cost of capital (WACC) compared with the above (1)?

Answer rating: 100% (QA)

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