Corp fin topic test - chu

CFA Level II Corporate Finance
#1

Q.4. I understand deriving the cost of equity from r0, when a firm goes from no debt to some, but if a firm already has debt and changes it to higher, why can’t we derived the new cost of equity from previous wacc? (Wacc is supposed to be constant under Miller modilgiani, after all)

#2

there is tax in this system, WACC cant be constant

#3

Thanks. I’m just so rushing through everything