Question : Provided that interest on debt is 12%, dividend to share holders are 15%. Calculate the weighted average cost of capital if debt is 70% and equity is 30%. Given, tax rate is 20%.

I know, the equation for WACC is:

$$WACC = i_d \frac{C_d}{V} + i_e \frac{C_e}{V}$$

The ratio $\frac{C_d}{V}$ and $\frac{C_e}{V}$ are known to us to be 0.7 and 0.3 respectively. I am quite confused on what the values of $i_d$ and $i_e$ would be.

Should I calculate $i_d$ and $i_e$ as 12%*120% and 15%*120% by considering the tax rate provided?


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