Problem: The common stock of William Tell Computers has a beta of .80. The treasury bill rate is 4 percent and the market risk premium is estimated at 8 percent. The company's capital structure is 30 percent debt paying a 8 percent interest rate, and 70 percent equity. The company's tax rate is 40 percent.
a. What is the company's cost of equity capital?
b. What is the WACC?