Hasco Corp is a multinational provider of lumber and milling

Solution

Also accepted The unlevered cost of equity is ra=0.35*7%+0.7*13% = 11.55% The WACC = 0.35*7%*(1-0.35)+0.7*13%= 10.69% New project: ra=15%, rd=8%, D/V=0.1 (D/E=0.1/0.7) The levered cost of equity is re=15%+0.142857*(15%-8%)*(1-0.35)=15.65 The WACC = 0.1*8%*(1-0.35)+0.7*15.65%= 11.475%