Can cost of equity be lower than WACC?

Normally no. WACC blends cost of equity with the after-tax cost of debt, so it sits between the two. Debt is usually cheaper, which keeps WACC below cost of equity. The order flips only when after-tax debt costs more than equity, which points to bad inputs or distress.

Equity costs 11% in the site example. Debt costs 6% before tax, or 4.74% after a 21% tax rate. Weighting 60% equity and 40% debt gives about 8.5%, well below 11%. For WACC to land above cost of equity, the after-tax cost of debt would have to top 11%.

That can happen with a struggling company whose bonds trade at high yields while its beta stays low. In that case, revisit beta and the cost of debt. See whether cost of equity can be less than the cost of debt, the WACC entry, and the cost of equity and WACC guide.