A firm raises $100 million by selling equity and debt, of which $40 million is debt and $60 million is equity. The rate of return offered to debt holders is 5% per annum, and to equity holders 8% per annum. The marginal rate of income tax for the firm is 36%. What is the firm's WACC?

Explanation: Straightforward application of the WACC formula. WACC =(E/(E+D))*Re + (D/(E+D))*Rd*(1-T)