If the financial Manager of Evergreen wants to decrease its cost of capital by adding more debt to its capital structure and arrive at a debt-equity ratio of 0.60. If its debt is in the form of a 6% semiannual bond issue outstanding with 15 years to maturity. The bond currently sells for 95% of its face value of $1000. On the other hand, suppose the risk-free rate is 3% and the market portfolio has an expected return of 9% and the company has a beta of 2. If the tax rate is 40%. Question 1  Calculate the company,s after-tax cost of debt. Question 2  Calculate the company,s cost of equity. Question 3  What would be the company’s overall cost of capital (WACC) at the targeted capital structure of debt equity ratio of 0.60?

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