First off, let me say that I am not looking for answers to my homework. I can find 10 sites on the internet that give me the answers I need for this problem, but I can't find anything telling me how to do it. Sure, there are lots that give you descriptions how to calculate, but either I'm not understanding what I need or I don't have the information I need to use (for what the site says). I understand what WACC (weighted average cost of capital) is, I just don't understand how to calculate it! The question I need to answer gives values from the balance sheet for Assets, Debt, and Equity. It wants me to find the cost of capital (WACC) given the Debt/Assets %, the After-tax Cost of Debt %, and the Cost of Equity %. I have the WACC formula [(E/V) * Re + (D/V) * Rd(1-Tc)], and I believe the After-tax Cost of Debt is the <Rd(1-Tc)> part of it? What is the Debt/Asset % used for? There are values of 0%, 10%, 20%,...,60% Thank you in advance, I hope someone can help!

My instructor gave the following 'hint': Debt/Assets After-Tax Cost of Debt Cost of Equity Cost of Capital 0% 8% 12% ? The cost of capital (k) is a weighted average: k = (weight)(cost of debt) + weight(cost of equity) Debt/ Weight x + Weight x = Cost of Assets Cost Cost Capital of Debt of Equity 0% (.0)(.08) + (1.0)(.12) = .120 How do I find the weight? I assume it has something to do with the percentages of Debt/Assets (0%, 10%, 20%,..., 60%), but I don't know where that fits

Wouldn't the weight of the debt, be the cost of the interest being charge on the loan? Or the interest rate it self?