Problem:
The common stock of Buildwell Conservation & Construction, Inc. has a beta of .80. The Treasury bill rate is 4%, and the market risk premium is estimated at 7%. BCCI's capital structure is 40% debt, paying an 8% interest rate, and 60% equity. Buildwell pays tax at 30%.
Required:
Question 1: What is BCCI's cost of equity capital?
Question 2: What is BCCI's WACC?
Note: Please describe comprehensively and provide step by step solution.