Weighted Average

You have been provided the information on the cost of debt and cost of capital that a company will have at a 10% debt ratio, and asked to estimate the weighted average cost of capital at 18%. The long term treasury bond rate is 6%. Assume the market risk premium is 6.4%. (30 points) Answer format is 12.3 for 12.30% and 17.55 for 17.55%.