Debt-equity ratio=Debt/equity Hence debt=0.65equity Let equity be $x Hence debt=$0.65x Total=debt+equity =(x+0.65x)=$1.65x After tax cost of debt=9(1-0.4)=5.4% WACC=Respective costs*Respective investment weights =(5.4*0.65x/1.65x)+(x/1.65x*13) which is equal to =10.01%(Approx). Solution Debt-equity ratio=Debt/equity Hence debt=0.65equity Let equity be $x Hence debt=$0.65x Total=debt+equity =(x+0.65x)=$1.65x After tax cost of debt=9(1-0.4)=5.4% WACC=Respective costs*Respective investment weights =(5.4*0.65x/1.65x)+(x/1.65x*13) which is equal to =10.01%(Approx)..