SL, Inc., is currently an all equity-firm with a betaof equity of 1. The risk-free rate is 5 percent andthe market risk premium is 8 percent. Assume theCAPM is true and that there are no taxes. What isthe company’s weighted average cost of capital? Ifmanagement levers the company at a debt to equity ratio of 5 to 1, using perpetual riskless debt, what will the WACC become? How would yourWACC answer change if the government raises thetax rate from zero to 30 percent?