Unlevered Cost of Equity Beginning with the cost of capital equation-that is: RWACC=(S)/(B+S) RS

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Step 1:  u000AStart with the given weighted average cost of capital (WACC) equation:  u000Au005C[ R_{u005Cmathrm

Unlevered Cost of Equity Beginning with the cost of capital equation-that is: $$ R_{\mathrm{WACC}}=\frac{S}{B+S} R_S+\frac{B}{B+S} R_B $$ show that the cost of equity capital for a levered firm can be written as follows: $$ R_S=R_0+\frac{B}{S}\left(R_0-R_B\right) $$