Break point for debt = 5 / 0.3 = $16.67m
Because the company will only be raising $12m (less than the break point for debt), its after‐tax cost of debt equals 5%.
Break point for equity = 6 / 0.7 = $8.57m
Because the company will be raising $12m (more than the break point for equity) its cost of equity equals 13%.
WACC = [0.13 x 0.7] + [0.05 x 0.3] = 10.6%.