Your firm’s cost of debt is 7% and the WACC is 12%. Assume no taxes. a) Calculate the cost of equity if the firm has 40% debt and 60% equity. (2) b) Calculate the cost of equity if the firm has 90% debt and 10% equity. (2) c) Which principle does this problem illustrate? Choose one: M&M Prop I without taxes, M&M Prop I with taxes, M&M Prop II without taxes, M&M Prop III. (1)