# Calculating the weighted average cost of capital

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?