hariRaj

No, the amount of debt that can be raised at an after tax cost of 3% is 3M, the amount of equity that can be raised at an after tax cost of 6% is 9M. Beyond/or at these thresholds, the cost changes. 9/.7 is how much capital would in total be raised, if from equity was 9M (9/.7=12.86, of which 9M equity and the rest 12.869=3.86 would have been debt, and the capital structure of 30% debt and 70% equity would have remained the same).