Templeton extended care facilities, inc. is considering
In order to compute the WACC for this acquisition, Templeton should use the weights of its cost of debt (72%) and cost of equity (28%). This is because the debt-equity ratio is 72:28; so, 72% of investment should be allocated towards debt while 28% will be invested in equity. The respective costs associated with each component should then be used when computing the weighted average cost of capital.